Good evening, TSPwire Tactical Investor!

It looks like hopes for Federal Reserve interest-rate cuts can carry stocks only so far.

In addition, the dollar hit a low against the euro amid worries that the economy is weakening. Expectations that the Fed will cut interest rates at its Tuesday meeting, making the dollar less attractive to investors, also weighted on the U.S. currency.

On Friday S&P 500 (C Fund) was nearly unchanged (up 3.8% for the year). While most stocks fell, investors were encouraged that they held on to much of Tuesdays gain. Rate-cut hopes have eased traders nerves about the economic impact of the credit crunch and housing downturn that has roiled markets. Investors remain on alert for credit surprises from financial sector.

Oil does not make our lives any easier. In 2006 oil inventories were higher because of market incentives to store oil, which meant energy buyers had a stockpile. By contrast, today, different market incentives have led to much lower oil inventories in key regions. As a results oil jumped above $80 a barrel, just as economy appears to be vulnerable to recession. Good news is that while $80.18 oil is an exchange record, oil has been higher in inflation-adjusted terms, which is $101.57, hit in April 1980.

Our models yielded interesting results this week. C and F Funds yielded BUY signals. At the same I & S Funds were downgraded to HOLD.

Based on results and expectations of rate cut we decided to put 40% in I Fund, 30% in C Fund and 30% in F Fund.