Good evening, TSPwire Tactical Investor!

Another crazy week! First we officially hit correction (major stock indexes went down 10% from its recent high). Then we have got biggest two-day rally in five years. What should we expect next?

Wall Street Journal published very interesting analysis of 116 previous corrections. Apparently once market falls 10% there is 50/50 chance it is heading for a 15% drop from its recent high. Then, if the 15% mark is breached, there is a 54% chance of a bear market (i.e. turning down 20% from its recent high).

On Monday, the Federal Reserve said it would extend loans for longer-then-usual terms to Wall Street dealers it deals directly. At the same time Fed officials are actively considering a variety of conventional and unconventional steps to improve credit conditions, though they have not revealed specifics. Another option for Fed would be to lower the rates it charges for loan it makes directly to banks from its discount window.

After correction we adjusted our target sell prices for I, S and C Funds and decided to keep allocation at the same level, i.e. 50% in I Fund, 30% in S Fund and 20% in C Fund.