Good evening, TSPwire Tactical Investor!

Last week we observed very jittery behavior in stock markets. Our predictions were right on point and all three funds that we elected ended the week in positive territory. C Fund gained 0.34%, S Fund 0.78% and I Fund jumped 1.27%.

Even though stocks performed very well during the last quarter a fairly big number of big investors are betting on a pullback. According to the latest monthly report NYSE said that the number of short-selling positions (fyi – short positions raise in value as stocks fall) had jumped 6.1%. One old rule of the thumb is that when the bears have piled into short positions, it may be a good time to bet against them. In the latest case, however David James, senior vice president of data firm James Investment Research, warns that hedge funds have such deep pockets, they may be able to wait out losses longer and delay any stock-market rally that can accompany a short-covering rally. At the same time we have to take into consideration two more reports surfaced this week:

1. Security Exchange commission is trying to stricken regulations that cover hedge funds.
2. According to Wealth Report rich individual investor continue to bail out from hedge funds.

All things considered we believe it is still would make sense to stick with the old rule of thumb and leave our funds in stocks. Our models yielded unusual results this week - S Fund got the best score and ended up with STRONG BUY signal. I Fund came second with BUY signal. C and F Funds yielded HOLD signals. Based on results we decided to re-allocate our holdings and put 50% into S Fund and 50% in I Fund.