TSP Talk -
Thrift Savings Plan

For the TSP, the C-fund gained 0.48% yesterday, the S-fund was up 0.14%, and the I-fund rallied 1.01%. The F-fund (bonds) fell 0.40%.
The market rallied based on a better than expected weekly jobless claims report. As word came out that this report contains only estimates from 9 states, it lost some credibility and the market gave up much of the early gains.
"For the latest reporting week, nine states didn’t file claims data to the Labor Department in Washington because of the Labor Day holiday earlier this week, a department official told reporters. California and Virginia estimated their figures and the U.S. government estimated the other seven."
-- Source: http://www.zerohedge.com The S&P 500 may have broken its longer-term downtrend, but it is too early to say. I want to see at least 3 closes above the descending trendline first, and yesterday's weak close nearly pushed the index back into the trading channel. So I'm encouraged by the breakout, but still skeptical. Also, the 200-day SMA (simple moving average) is just overhead and many traders and investors watch this MA closely so it may act as resistance on any further upside action.

Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Volume continues to be very light so neither the bulls nor the bears have been moving the market with any conviction. As we said last week during the pre-holiday trading, light volume trading can push the market around quite easily, and we are still seeing that this week. So, when will the institutional investors step in and take a stand? Low volume emotional moves tend to reverse quickly.
The market leader, Dow Transportation Index, closed down on the day yesterday and remained below the descending trendline by the close. We are seeing a signs of stalling which sometimes precedes a change in direction.

Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Bond yields have been rallying again, after appearing to peak on Friday. The descending trendline has been broken, which is a bad sign for bonds and the F-fund, should the trend turn. If bond yields do break their downward trend, it could be a positive for the stock market.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
So, as we've seen, both stocks and bonds are flirting with changing their trends - each in a different direction. My guess is both will do the same thing. That is, both will break their trends, or both will go back into their longer-term trends. This could be an interesting month for the stock and bond markets. We could have our answer as early as next week.
The TSP Talk Sentiment Survey System moved to a sell signal for next week, after this week's 1.02 bulls (44%) to bears (43%) ratio. With the 50-day EMA still below the 200-day EMA on the S&P 500, we are using the bear market rules, and in a bear market any ratio over 1 to 1 is a sell signal (100% G-fund). Through Thursday, the system is up an impressive 14.8% in 2010.
Thanks for reading! Have a great weekend!
Tom Crowley