06/04/26
Yesterday was one of those down days that we've only heard about, but few have actually witnessed in the wild. The S&P 500 and Nasdaq had been up for 9 straight days before yesterday's dip. The S&P 500 has also been up for 9 straight weeks and it has two days to erase the current 26-point loss that is has this week, to keep that weekly winning streak alive. We haven't seen 10 consecutive positive weeks since 1985.
There were more 52-week lows on the NYSE than new highs yesterday. Imagine that, given the meteoric rise to new highs in the stock market recently.
Stocks are doing very well in recent months so it's difficult to be critical, but with oil still obviously part of the formula, the on again, off again deals with Iran is getting tiring and some what frustrating as an investor, but again, the stock market hasn't seemed to care for a long time now.
WTIC Oil was up 2.6% yesterday, pushing it to $96 a barrel, and after rebounding off the purple (86 day) moving average, it appears to be on its way to retesting the 100 area, where the old broken support meets the pennant formation's descending resistance line. That retest wouldn't be unusual. I know I say this often enough that you may be tired of hearing it, but pennants often throw us a fake out in one direction, only to reverse and eventually break in the other direction. This hasn't been a text book pennant fake out, but it still has that potential if some kind of resolution to the situation with Iran is not made soon.
The 10-year Treasury Yield rallied on better than expected economic data, both ISM Services data and weekly ADP employment data, as well as the rally in oil. So, the strong support near 4.4% continues to hold.
We also saw a rally in the dollar, and it was enough to create a bullish breakout above the May consolidation, and make a two month high.
For that reason the I-fund was the lagging TSP Fund yesterday with ACWX falling 1% on the day.
The S&P 500 (C-fund) pulled back from the top of the narrow F-flag channel that has been growing for nearly a month now, after the explosion off the lows in April. The PMO indicator just fell below its moving average, and the MACD Histogram continues to make lower highs while the Index makes higher highs.
The semiconductors continue to be very strong and may have kept the S&P 500 and Nasadq from a more severe loss yesterday as the $SOX Index was up 1.4%. However, two tech behemoths, Broadcom (AVGO) and Crowdstrike (CRWD), were trading down sharply in after hours trading last night after reporting earnings. Broadcom is a big part of the $SOX Index.
The SpaceX IPO is coming up quickly and it will be the largest IPO ever. It will have an initial market cap valuation of $1.77 trillion, which would put it in the top six companies in the world. I heard a couple of older Wall Street veterans talk about the dilution effect (not delusion) that this could have on investors who want in. A drain on liquidity. Where does the money come from to buy a company this big? It could mean selling elsewhere and it could set up some kind of temporary peak for the market as it digests this new infusion of supply.
Truist's Keith Lerner created this chart of the drawdown during the first year of a major IPO:
The May jobs report will come out on Friday morning. Estimates are looking for a gain of between 85K and 100K jobs, and an unemployment rate of 4.3% to 4.4%.
Additional TSP Fund Charts::
DWCPF (S-fund) lost 1% yesterday but that wasn't even enough to erase all of Tuesday's gains. It's due for at least a short-term dip, and once those gaps get filled we'll see how it reacts. But four gaps open on an index chart is not normal action. It's now up 21% off the low in late March.
BND (bonds / F-fund) fell back below the apex of its pennant formation, but it managed to close just above the 50-day average, so there was some fighting going on from the bond bulls. Yields look to me like they may want to remain buoyant, so this BND chart may continue to struggle without some kind of dovish geopolitical headline that impacts oil negatively.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
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Posted daily at www.tsptalk.com/comments.php
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
Yesterday was one of those down days that we've only heard about, but few have actually witnessed in the wild. The S&P 500 and Nasdaq had been up for 9 straight days before yesterday's dip. The S&P 500 has also been up for 9 straight weeks and it has two days to erase the current 26-point loss that is has this week, to keep that weekly winning streak alive. We haven't seen 10 consecutive positive weeks since 1985.
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There were more 52-week lows on the NYSE than new highs yesterday. Imagine that, given the meteoric rise to new highs in the stock market recently.
Stocks are doing very well in recent months so it's difficult to be critical, but with oil still obviously part of the formula, the on again, off again deals with Iran is getting tiring and some what frustrating as an investor, but again, the stock market hasn't seemed to care for a long time now.
WTIC Oil was up 2.6% yesterday, pushing it to $96 a barrel, and after rebounding off the purple (86 day) moving average, it appears to be on its way to retesting the 100 area, where the old broken support meets the pennant formation's descending resistance line. That retest wouldn't be unusual. I know I say this often enough that you may be tired of hearing it, but pennants often throw us a fake out in one direction, only to reverse and eventually break in the other direction. This hasn't been a text book pennant fake out, but it still has that potential if some kind of resolution to the situation with Iran is not made soon.
The 10-year Treasury Yield rallied on better than expected economic data, both ISM Services data and weekly ADP employment data, as well as the rally in oil. So, the strong support near 4.4% continues to hold.
We also saw a rally in the dollar, and it was enough to create a bullish breakout above the May consolidation, and make a two month high.
For that reason the I-fund was the lagging TSP Fund yesterday with ACWX falling 1% on the day.
The S&P 500 (C-fund) pulled back from the top of the narrow F-flag channel that has been growing for nearly a month now, after the explosion off the lows in April. The PMO indicator just fell below its moving average, and the MACD Histogram continues to make lower highs while the Index makes higher highs.
The semiconductors continue to be very strong and may have kept the S&P 500 and Nasadq from a more severe loss yesterday as the $SOX Index was up 1.4%. However, two tech behemoths, Broadcom (AVGO) and Crowdstrike (CRWD), were trading down sharply in after hours trading last night after reporting earnings. Broadcom is a big part of the $SOX Index.
The SpaceX IPO is coming up quickly and it will be the largest IPO ever. It will have an initial market cap valuation of $1.77 trillion, which would put it in the top six companies in the world. I heard a couple of older Wall Street veterans talk about the dilution effect (not delusion) that this could have on investors who want in. A drain on liquidity. Where does the money come from to buy a company this big? It could mean selling elsewhere and it could set up some kind of temporary peak for the market as it digests this new infusion of supply.
Truist's Keith Lerner created this chart of the drawdown during the first year of a major IPO:
The May jobs report will come out on Friday morning. Estimates are looking for a gain of between 85K and 100K jobs, and an unemployment rate of 4.3% to 4.4%.
Additional TSP Fund Charts::
DWCPF (S-fund) lost 1% yesterday but that wasn't even enough to erase all of Tuesday's gains. It's due for at least a short-term dip, and once those gaps get filled we'll see how it reacts. But four gaps open on an index chart is not normal action. It's now up 21% off the low in late March.
BND (bonds / F-fund) fell back below the apex of its pennant formation, but it managed to close just above the 50-day average, so there was some fighting going on from the bond bulls. Yields look to me like they may want to remain buoyant, so this BND chart may continue to struggle without some kind of dovish geopolitical headline that impacts oil negatively.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
Updated monthly:
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
For more info our other premium services, please go here... www.tsptalk.com/premiums.php
To get weekly or daily notifications when we post new commentary, sign up HERE.
Posted daily at www.tsptalk.com/comments.php
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
