Good evening, TSPwire Tactical Investor!

US Stocks tried to recover in the beginning of Friday’s session but then lost their grip and slid down again.

The blue-chip stocks (C Fund) ended week almost 4% down and stopped only 5% away from the 20% bottom since October 9th high. (FYI: 20% decline is a technical definition of a bear market. 10% decline – market correction.)

With the possibility of recession weighing heavily on the market investors are hoping for help from Federal Reserve board and President Bush. Unfortunately Mr. Bush’s speech on economic relief did not provide enough details that investors were looking for.

Several indicators, including the Fed Model, showing that stocks are extremely undervalued comparing to bonds. For example, last June SP 500 (C Fund) stocks were priced at 14.2 times this year earnings. After the recent downturn they are trading at 13 times their expected earnings for 2008!!! Are we about to observe a rebound in US Stock market? May be… and in the next few weeks we expect to get more information from Feds and Mr. Bush that will define direction of the markets for the next several months. Until then we are keeping our allocation at the same level: 50% in I Fund, 25% in F Fund and 25% in C Fund.