Weekly update TSP, September 9, 2011

This week it didn’t take long to come to the conclusion that the European Stock markets were having a direct influence on our stock market. Just a take a quick look above at the European weekly numbers and you will see they took a 5.76% loss in one week. Our markets were a little shaky but for the most part inching along in a upward pattern and then Friday that all came to a close. The S&P 500 was building off a pivot low and needed to follow through above $1230 to create a new pivot high, which keeps our staircase building upwards. Then whatever happened in Europe and the news here, must have caused an unexpected reversal that created a pivot high that was lower than the last and that is bad. What is means is that a possible continuation of more downside loss is highly probable. Can you hear me sigh yet?

Ok if you look at the European daily chart with my notes on the chart you will see that it is in total collapse. It really, really needs to hold an bounce off $48. If it doesn’t, then $45 is the next support point and that is almost another 10% loss. Taking this one step further, saying that $48 doesn’t hold and then $45 doesn’t hold, then it is on. There is no other major support points for this index and I would running for safety. This will affect our markets if it plays out, so watch these numbers closely next week.

The F fund or bonds are still looking very nice and if you are in them, well done you. If this index in the future starts to pullback and Gold starts to fall, be looking for the stock market to take off and start running uphill. When this happens is anybody’s guess.

I have a few people ask me where I think the markets are going to go in the future and since I cannot see into the future, I cannot be 100% sure. My prediction is that the markets will go up and down!! There you have it.

Conclusion: If you in the C and S, be very, very careful this week and if the S&P500 closes below $1140, you need to consider highly bailing out to safety. If you are in the I fund or International, you shouldn’t be and you are on your own. If you in the F or bonds, well done and stay there for now. If you out, I would think about bailing here next week.

TSP Distribution: C-fund – 35%, S-fund – 35%, G-fund – 30%