Good evening, TSPwire Tactical Investor!

Highest jump in 5 years and second worst drop since February occurred in the last 5 days?.. We survived another volatile week on Wall Street. Good news is that we didn’t loose money. Bad news is that we did not earn money either.

All our models this week yielded negative signals. F Fund got the worst score and ended up with STRONG SELL signal. C, S and I Funds got about the same scores and ended up between HOLD and SELL signals. Once again we decided to hold our allocation at the same level. We are betting on more aggressive actions from Feds.

Recent sell-off was caused by drying liquidity on the credit market. Let’s be realistic – liquidity is dead. In recent days, Wall Street has embraced help from central banks in US and Europe. On Friday the Federal Reserve artificially improved liquidity by injecting cash in the financial system. Even bigger injections were made by European central banks on Thursday and Friday. The main question now is whether the Fed will go one step further and cut interest rates.

In our opinion there are no reasons to expect improvements in housing and/or sub-prime mortgages markets any time soon. Interest rate cut is the only logical solution that can improve problems with liquidity in credit markets.

Ladies and Gentlemen, buckle your sit belts. Turbulence on the markets will eventually end.