12/08/25
Stocks were up again on Friday, making it four in a row for the S&P 500, but the fade into the close created some questionable reversal patterns on some of the charts. The late selling pushed the small caps (S-fund) into negative territory for the day, but all three TSP stock funds ended the week in positive territory, while bonds pulled back. Get ready for this week's Fed meeting.
The PCE Prices data came in fairly close to expectations. It showed that inflation is still above the Fed's target level so it is not completely benign, but it is likely not a big enough issue to keep the Fed from cutting interest rates again this week.
That will be the highlight of this week - Wednesday's Fed policy statement, their decision on interest rates, and the press conference afterward. It's theater, and will cause volatility, but it could set the tone for the rest of the year and into the start of next year.
The Federal Reserve governors had grown more hawkish at the prior meeting, and that shook up the stock market, however they seem back on the dovish side, although there does seem to be some tension between the Fed and President Trump as Trump will be replacing Powell in 2026, and could be announcing his successor very soon. So, it should be interesting to see how Powell and the other Fed member approach this final meeting of 2025.
Besides interest rate cut, Former NY Fed Repo Guru Mark Cabana says: "Powell Will Announce $45 Billion In T-Bill Purchases On Wednesday." This is big and a green light for the stock market if true.
The thing is, we've known this might be coming likely, and if I know about it, it is old news and the question is, how much of it has been getting priced in already?
It could be why the dollar has been weakening in recent weeks. It is trying to find support at the 50-day moving average, but the support line was broken last week.
The Yield on the 10-year Treasury has been strengthening and that has been putting pressure on bond prices and the F-funds. That's actually the tail wagging the dog as it is actually bond prices falling that is causing yields to move up. Why? It could be because lower rates and the Fed's increasing liquidity could give inflation a reason to come back into the picture, and yields tend to rise with inflation concerns. The yield does remain in a trading channel and it is threatening to move above that channel.
BND (bonds / F-fund) moves down when yields go up and this chart looks like a potential head and shoulders pattern, which could be suggesting a breakdown is coming in the F-fund. The Fed could change this if they do something unexpected.
The late action on Friday in the stock market was a little concerning. We have a set up for a possible double top pullback and the late selling near the previous highs does not change that theory. It wasn't a major reversal, and with what we expect the Fed to, the bulls are likely still in charge but there is always a possible "sell the news" reaction to the bullish news we are all expecting.
The Dow Transportation Index continues to tack on gains after the recent breakout. The inverted head and shoulders patterns give this a bullish outlook longer term, although some backing and filling is certainly a possibility. I would expect this to test the 2024 highs, but coming back to test the breakout line is always a possibility as well. Being the market leader, the rest of the market could ride its coattails, whichever way it goes from here.
This week and next will be busy with economic data, plus the Fed meeting so the catalysts are there for big moves or some volatility.
The S&P 500 (C-fund) is in a rising trading channel and looking good. A double top pullback is always a possibility, and mid-December may be the time for it to occur, I am a little concerned about the negative reversal on Friday, but the market has so much going for it in the intermediate term that any pullback will likely get bought quickly.
The DWCPF Index (S-Fund) has a little more room above before hitting a double top, and lower interest rates and looser monetary policy is a catalyst for small caps. But we know the small caps likely won't do much if the S&P 500 is falling, so whether or not we see a double top pullback in the $SPX could determine when this one tests its previous highs this month, although it seems inevitable in the coming weeks.
ACWX (I-fund) also posted a negative reversal on Friday but it did make its way back into the trading channel after the breakdown last month. The open gap and the 50-day EMA have me concerned for the short-term, but this still looks bullish, especially if that breakdown in the dollar holds. This one would be a triple top if it tags the 67.50 area again, and triple tops are less threatening than double tops, although a right shoulder could get formed before it breaks out.
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
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.
Stocks were up again on Friday, making it four in a row for the S&P 500, but the fade into the close created some questionable reversal patterns on some of the charts. The late selling pushed the small caps (S-fund) into negative territory for the day, but all three TSP stock funds ended the week in positive territory, while bonds pulled back. Get ready for this week's Fed meeting.
| Daily TSP Funds Return
More returns |
The PCE Prices data came in fairly close to expectations. It showed that inflation is still above the Fed's target level so it is not completely benign, but it is likely not a big enough issue to keep the Fed from cutting interest rates again this week.
That will be the highlight of this week - Wednesday's Fed policy statement, their decision on interest rates, and the press conference afterward. It's theater, and will cause volatility, but it could set the tone for the rest of the year and into the start of next year.
The Federal Reserve governors had grown more hawkish at the prior meeting, and that shook up the stock market, however they seem back on the dovish side, although there does seem to be some tension between the Fed and President Trump as Trump will be replacing Powell in 2026, and could be announcing his successor very soon. So, it should be interesting to see how Powell and the other Fed member approach this final meeting of 2025.
Besides interest rate cut, Former NY Fed Repo Guru Mark Cabana says: "Powell Will Announce $45 Billion In T-Bill Purchases On Wednesday." This is big and a green light for the stock market if true.
The thing is, we've known this might be coming likely, and if I know about it, it is old news and the question is, how much of it has been getting priced in already?
It could be why the dollar has been weakening in recent weeks. It is trying to find support at the 50-day moving average, but the support line was broken last week.
The Yield on the 10-year Treasury has been strengthening and that has been putting pressure on bond prices and the F-funds. That's actually the tail wagging the dog as it is actually bond prices falling that is causing yields to move up. Why? It could be because lower rates and the Fed's increasing liquidity could give inflation a reason to come back into the picture, and yields tend to rise with inflation concerns. The yield does remain in a trading channel and it is threatening to move above that channel.
BND (bonds / F-fund) moves down when yields go up and this chart looks like a potential head and shoulders pattern, which could be suggesting a breakdown is coming in the F-fund. The Fed could change this if they do something unexpected.
The late action on Friday in the stock market was a little concerning. We have a set up for a possible double top pullback and the late selling near the previous highs does not change that theory. It wasn't a major reversal, and with what we expect the Fed to, the bulls are likely still in charge but there is always a possible "sell the news" reaction to the bullish news we are all expecting.
The Dow Transportation Index continues to tack on gains after the recent breakout. The inverted head and shoulders patterns give this a bullish outlook longer term, although some backing and filling is certainly a possibility. I would expect this to test the 2024 highs, but coming back to test the breakout line is always a possibility as well. Being the market leader, the rest of the market could ride its coattails, whichever way it goes from here.
This week and next will be busy with economic data, plus the Fed meeting so the catalysts are there for big moves or some volatility.
The S&P 500 (C-fund) is in a rising trading channel and looking good. A double top pullback is always a possibility, and mid-December may be the time for it to occur, I am a little concerned about the negative reversal on Friday, but the market has so much going for it in the intermediate term that any pullback will likely get bought quickly.
The DWCPF Index (S-Fund) has a little more room above before hitting a double top, and lower interest rates and looser monetary policy is a catalyst for small caps. But we know the small caps likely won't do much if the S&P 500 is falling, so whether or not we see a double top pullback in the $SPX could determine when this one tests its previous highs this month, although it seems inevitable in the coming weeks.
ACWX (I-fund) also posted a negative reversal on Friday but it did make its way back into the trading channel after the breakdown last month. The open gap and the 50-day EMA have me concerned for the short-term, but this still looks bullish, especially if that breakdown in the dollar holds. This one would be a triple top if it tags the 67.50 area again, and triple tops are less threatening than double tops, although a right shoulder could get formed before it breaks out.
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
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.
