TSP Talk - Thrift Savings Plan Strategies

Market Comments

March 16, 2010

Current TSP Share Prices

Today's Commentary (Short Term Outlook)

Torn

Stocks were mixed again yesterday with some indices, up and some down. The Dow closed up 17-points, near the high of the day after a nice late afternoon rally, but broader market indices did not perform nearly as well.

For the TSP, the C-fund was up 0.05%, the S-fund fell 0.37%, and the I-fund dropped 0.93% as the dollar was up 0.5% after rebounding off of that first support level we talked about yesterday. The F-fund was up 0.06%.

Things should start getting interesting now as the market has rallied almost relentlessly into today's FOMC meeting, the deadline for Greece (which a bailout is seeming more likely), and a potential resolution to the long battle on healthcare.

The technical picture in the charts has the bulls quite giddy as we are getting "all's clear" signs in many, many charts. Unfortunately I am torn between that giddiness and the potential pitfalls that could take it away.

I know I don't normally talk about fundamentals since I feel that the market does not always trade in tandem with the fundamentals, but eventually it does have to deal with it. I remember several years ago when there were folks on our message board, obviously a lot smarter than me, posting about subprime mortgages and severe credit problems that would surely take the market down. At the time, the market continued to climb, but as we know, in 2007-2008 the market finally paid the price. The question is, has the market finished paying the price?

So, perhaps we can continue to rally despite headlines like:

U.S., U.K. Move Closer to Losing AAA Rating, Moody’s Says

There isn't anything new to report in the S&P 500 index as the index was basically flat yesterday. No breakout. No double top pullback.

                     Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

We know that our sentiment survey data is getting close to a sell signal with the recent 1.81 to 1 bulls to bears ratio. It takes a 2.0 to 1 ratio to give us a sell signal, but one of our put/call ratios is at an extreme reading now.

                     Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

It is hitting a 0.55 to 1 put/call ratio and each of the prior three times this level has been reached, the market did start to pull back.

We should be getting the Fed's monetary policy statement this afternoon at 2:15 PM ET. I don't expect any surprises, but if we get one, let the fireworks begin.

For those interested, we are starting our annual March Madness Contest. For more info, please click here.

Thanks for reading. We'll see you back here tomorrow.

Tom Crowley

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