Monday, September 27, 2010

General TSP Discussion.

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SgtWs

Monday, September 27, 2010

Post by SgtWs »

The only place success comes before work is in the dictionary.
- Vince Lombardi, football coach

S&P (C Fund) - Man, volume was up on Friday's move. Does this thing have legs? The economic news was generally favorable Friday. Durable goods numbers were better than expected, and new-home sales were just shy of expectations. A month ago the very same news would have caused us to tank. So what gives? The election? The Fed? End of the recession? Who cares! The truth is no one really knows why it happened or if it will hold. But whatever you call it - DANG it felt bullish! I hope it keeps going!

One thing I think we can say now is that our old level of resistance has become our new level of support:

Image

Now any drop below the 1130 area would mean our break out has failed and we could possibly advance to our next level of resistance in the 1220 area (the highs we reached back in May).

I'm near term bullish. Here are the items I'm planning on watching this week:

TUESDAY - S&P Case Shiller, Consumer Confidence, State Street Investor Confidence Index

THURSDAY - Jobless Claims, Chicago PMI, Fed Balance Sheet

FRIDAY - Motor Vehicle Sales, Personal Income & Outlays, Consumer Sentiment, ISM Mfg Index, Construction Spending

Other issues.........my thoughts here and there............

Because I did a poor job formulating the tax poll question and was accused of showing my bias/intent for the poll, I wanted to address this issue here in an open forum and tell you how I see it.

Taxes - all the political rhetoric over taxes and tax cuts is heating up and will certainly be getting hotter the rest of this month. The biggest concern I have over the indecision is not whether they allow the tax cuts to expire or not, but just simply that is makes it impossible to do any long-term planning from here based on this uncertainty. I want clarity. I have no real control over what happens, so what I want is a mute point. I need to know what the tax rate will be so I can plan for the future.

For now I think we must assume that the tax rate on investments (bonds interest and dividends) will rise from 15% to 39.6% for some. According to the Tax Foundation (non-partisan? - their claim, not mine), the average middle-income family will pay about $1,500 more in federal taxes if the tax cuts do expire. But I believe Congress will extend the tax cuts on the middle class while allowing the rate on incomes greater then $250K go up.

Either way, I think you are better off putting as much of your money as possible in tax deferred accounts. Disclaimer here - I personally love the Roth IRA and use TDAmeritrade and Investors Business Daily to manage my investments. I have no affiliation with either. None what-so-ever.

Now, while I am a big fan of the Roth, I also believe our politicians will eventually change the laws so they too can be taxed. I say this simply because there is so much money in these accounts, and the temptation for politicians to take your money will be too strong to resist. You cannot escape death or taxes, and the Roth will be no exception. I also think the preferential treatment MLPs receive will be taken away too.

The one thing I have taken note of and believe is prudent for some, many advisors are now pushing clients to also consider non-traditional forms of investments in areas clients have a passion (classic cars, art, rare collectibles) as another means to grow and protect wealth in areas that are not so heavily regulated by the government.

In the end taxes are going up. There is simply no way around it. A revision of the tax code should be explored, but it just isn't going to happen. As for me, I'm for lower taxes simply because I don't think raising taxes will solve the problem. If our politicians see more money coming in, they will simply spend more. This has always been the case and there is nothing out there to make me feel it will change in the future. Politicians are there for their own benefit, not yours. Anything they do is for self preservation, not what you really want/need. I have a son and daughter, and I always tell them that if they really want to keep daddy happy, then don't bring home a lawyer or politician. I have no respect for neither.

Consumer Spending - Unemployment aside, our current situation is, um, odd. Americans are often criticized for spending too much and not saving enough. Consumer spending now accounts for about 70% of GDP, so the economy will not improve until consumers start spending again. Before the crash Americans were saving only like 1%, but now the savings rate has increased to almost 6%. Our new found frugality is now crippling us. While saving is a 'good' thing, right now we need consumer spending.

U.S. Treasuries - U.S. Debt may be safe (are they still?), but they could quickly lose value if inflation starts heating up. But if deflation becomes a problem, they could actually continue their run. I will leave that others to speculate.

Gold - who knows where this is going?

Buy and Hold - The C Fund - as of late summer, if you had bought and held the S&P 500 (C Fund) for 10 years was looking at a loss of about 7% (according to market-analysis research firm Ned Davis Research). If you bought and held since March 1999 then you are down almost 30%! Simply put, buy and hold works until it doesn't, and lately it doesn't. I refer to it more as buy and pray/hope, because that really is all you are doing.

SgtWs

Re: Monday, September 27, 2010

Post by SgtWs »

Interesting.....from CNBC.com

Does S&P Bounce Confirm Next Leg Higher?

On Friday the traders were closely watching the action in the S&P which surged back above the key 1130 level.

Market technicians consider the move rather bullish, considering 1130 was a level where the S&P failed in both June and August. They say it confirms the theory that what was once resistance has now become support.

The bullish sentiment was amplified by market fundamentals. The latest economic data showed about a 4% increase in business spending last month with manufacturing activity providing a particular bright spot.

Does the S&P bounce confirm the next leg higher?

Instant Insights with the Fast Money traders

Some of Friday’s move higher is likely short covering, explains Steve Grasso of Stuard Frankel. On Thursday investors thought the market was about to fall off the cliff again. Then Friday it didn’t pan out and now bears are scrambling to cover their shorts.

I was one of those skeptics, admits OptionMonster Pete Najarian and the rally caught me off guard. The way stocks closed Thursday combined with the spike in the Vix looked like the beginning of a sell-off. But now I think the market is going higher.
Looking more closely at the technicals the next key level is 1150, Steve Grasso adds. If we can get above 1150, it opens to door quickly to 1165 as perhaps even 1185. Also, it’s important to note that the S&P can fill gaps and, technically, the trend remains bullish. That means the market can fall as far as 1110 and the rally remains in tact as long as we don't break below. Big picture, I think the S&P is going higher.
---------

NO MATTER WHAT STOCKS GO HIGHER?

Also, comments from hedge fund heavy weight David Tepper of Appaloosa generated tailwinds for bulls. In a CNBC exclusive interview he said he believes the economy will improve and doesn’t expect the S&P to slide much lower than 1100. (Click here for our entire interview.)

”Either the economy gets better by itself and what assets are going to do well… stocks,” he said. ”Or the economy doesn’t pick up and the Fed steps up with QE and what does well… everything!”

More insights from the Fast Money gang
I also think the market is going higher, says Joe Terranova. Don’t forget we’re in the end of September which is historically not very good. But, this year we haven’t had the typical sell-off. I have to believe money managers are caught by surprise and now they’re forced to chase performance. To me the play is the Nasdaq , CME and other exchanges as a bet that volume is not as bad as expected.

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idiq
Posts: 84
Joined: Fri Jul 02, 2010 10:12 am

Re: Monday, September 27, 2010

Post by idiq »

SgtWs wrote:As for me, I'm for lower taxes simply because I don't think raising taxes will solve the problem. If our politicians see more money coming in, they will simply spend more. This has always been the case and there is nothing out there to make me feel it will change in the future.


Completely agree. The logic is the same as with distributing tax rebates - quite simply, the more you have the more you spend.

elphaba
Posts: 40
Joined: Wed Jan 07, 2009 11:33 pm

Re: Monday, September 27, 2010

Post by elphaba »

Doesn't bother me that the funds aren't doing too well today - numbers may be a bit down but can't say they indicate "tanking". (At least not yet - market still open as I write this).

Today's numbers have a nice feel of "consolidation" trying to focus on its new support line and getting ready to move ahead and up. Let's hope anyway.

Would have been a nice day to buy in (but I'm already bought in so I'm hanging out for now). I'm ready to weather the end of September which sometimes can be volatile. crossing fingers...

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bigredned
Posts: 60
Joined: Fri Aug 06, 2010 2:05 pm

Re: Monday, September 27, 2010

Post by bigredned »

I'm out for the month, but I'll be watching... and waiting.. to get back in when October rolls around in a few days. Go, C Fund! Go! :D

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UwshUwerME
Posts: 85
Joined: Fri Jul 09, 2010 2:55 pm

Re: Monday, September 27, 2010

Post by UwshUwerME »

You want the C Fund to go up while you're on the side? So that you can buy high in October?

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bigredned
Posts: 60
Joined: Fri Aug 06, 2010 2:05 pm

Re: Monday, September 27, 2010

Post by bigredned »

UwshUwerME wrote:You want the C Fund to go up while you're on the side? So that you can buy high in October?


Not so much that. I would just be more optimistic to join back in if the bullish market continues. I've been hearing ceilings as high as 1250, so...

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bigredned
Posts: 60
Joined: Fri Aug 06, 2010 2:05 pm

Re: Monday, September 27, 2010

Post by bigredned »

Whoa, looks like the wheels fell off right before close on EVERYTHING. What happened?

SgtWs

Re: Monday, September 27, 2010

Post by SgtWs »

The market giveth, the market taketh away..........

:mrgreen:

crondanet5
Posts: 4330
Joined: Tue Aug 19, 2008 8:51 pm

Re: Monday, September 27, 2010

Post by crondanet5 »

What happened? Easy. The trading program is called "Dagger." When the market fluffs sideways most of the day the traders employ the Dagger trading program (or similar ones) that cut up all the trades and end with a drop. That's another challenge with those people trying to make an IFT decision at 1145 EST: you don't know how the day's trading will end. Now if I was chomping at my first October IFT I'd love for all 3 markets to drop to their lowest level ever. That would surely signal a sharp rise in October, don't you think? Not necessarily. Review September 2007 C and S Fund charts. What happened? Is it happening again? Details in November. :lol:

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flight23
Posts: 1342
Joined: Mon Jul 26, 2010 10:47 am

Re: Monday, September 27, 2010

Post by flight23 »

bigredned wrote:Whoa, looks like the wheels fell off right before close on EVERYTHING. What happened?


Fortunately the I fund managed to eek out a gain and the F fund made a significant jump... so as long as you werent 100% C/S it was probably buffered a bit.
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Fund Prices2024-03-28

FundPriceDayYTD
G $18.15 0.05% 1.05%
F $19.08 -0.06% -0.74%
C $82.21 0.11% 10.55%
S $82.43 0.30% 6.92%
I $42.57 -0.24% 5.95%
L2065 $16.38 0.02% 8.37%
L2060 $16.39 0.02% 8.38%
L2055 $16.39 0.02% 8.38%
L2050 $32.73 0.01% 6.95%
L2045 $14.91 0.02% 6.58%
L2040 $54.38 0.02% 6.22%
L2035 $14.34 0.02% 5.79%
L2030 $47.67 0.02% 5.38%
L2025 $13.15 0.03% 3.43%
Linc $25.61 0.03% 2.82%

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