TSP Weekly Wrap-Up – TSP Funds Consolidating

Hi everyone – It’s your weekly dose of TSP Talk from www.tsptalk.com.

Stocks and the TSP funds moved mostly sideways last week, although the I-fund was the victim of a strong dollar and its losses spread into the L-funds.

For the week, the C-fund and S-funds were up slightly at +0.09% and +0.18% respectively. The recent strength in the dollar is putting pressure on the I-fund resulting in a 2.31% loss for the week. The F-fund (bonds) added 0.14%, and with interest rates still very low, the G-fund’s current annual rate of 2.875% gave those in the G-fund a weekly gain of 0.05%.

You can see above that all of the L-funds closed lower on the week, and that was a direct result of the losses in the I-fund. But for the month of December, all of the stock funds are up, the F-fund is down, and for the year there is a strong sea of green across the board.

Stocks continue to consolidate as the major indices have been moving basically sideways for the last five weeks. This is probably the best thing that could have happened to a market that has seen the S&P 500 move up from a low of 666 in March, to 1100 in October.

Whether or not stocks are able to keep this bull market rally going in 2010 remains to be seen, but if we are going to see a Santa Claus rally this year, which – as someone who looks for opportunities to buy and sell rather than “buy and hold” – is what I am focusing on right now, and the recent consolidation is a nice prelude to getting it done.

Some are saying that investors are “too bullish” right now, which can be a problem for the market (we talked about this concept back on October 19), but considering the S&P 500 is up 65% from its low in March, the sentiment surveys are not really overly bullish.

One of the primary surveys I watch is the AAII Survey. Their latest survey shows 43% bulls and 35% bears for a 1.23 bulls to bears ratio, which is not overly bullish at all. This survey has hit 2 to 1, 4 to 1, and even 8 to 1 bulls to bears ratios in this decade, so after a 65% rally, a 1.23 to 1 ratio is not bad.

For this reason, and for the reasons we talked about last week regarding late December’s bullish bias, I believe the market can continue to hold or rally into the end of the year, but I do have some concerns for 2010.

Good luck, and thanks for reading! We will be back here next week with another TSP Weekly Wrap Up.

Tom Crowley
TSP Talk