07/28/25
Stocks rallied again on Friday so that means the S&P 500 was up everyday last week. And if you're a regular reader of these commentaries you know that we've been letting everyone know that late July can be tough time for stocks historically. So much for history. The indices continue to stretch higher as the bulls have not let up. The I-fund actually led the TSP funds last week with a gain of 1.62% while small caps gained just under 1% to lag the stock funds. Bonds and the F-fund were up as well for the week at +0.37%.
(The most current commentary is always posted here: www.tsptalk.com/comments.php)
We head into this new week with the S&P 500 (C-fund) at an all time high, and this weekend the US announced a major trade deal with the European Union including a 15% reciprocal tariff and the EU has agreed to buy $750 billion worth of energy products from the U.S. and invest an additional $600 billion. The futures were up about 0.40% when they opened up on Sunday evening.
So stocks will likely move up initially, but how much of this has been priced into the current market action? Will we see a sell the the news reaction after any initial reaction? It has been difficult to fight the bullish momentum of this stock market and S&P 500, which has now been up five days in a row and for four of the last five weeks. The index is currently is 289 points above its 50-day EMA (299 above the simple 50-day average) and more than 500 points above the 200-day average. All positive as far as measuring market strength, but clearly extended in the short-term.
As far as valuations go, we can use the Buffett Indicator, which is the total US Market Value divided by the GDP, to give us an idea of how expensive stocks are at any one point in history. According to Warren Buffett, "If the ratio approaches 200%, as it did in 1999, you are playing with fire."
It is currently at 220%, so it is now higher than before the Dot Com bubble burst.
There's no law that says this rally has to end now, and that makes it frustrating for both market timers and value investors, as we never know how much longer we have before an inevitable, pullback or correction begins.
Here's an interesting chart. It is the 4 year seasonal election cycle chart and we are currently through month 7 of a post election year.
The source of this chart, linked below, only showed this chart through the end of June, so I added July manually and it may not be exactly accurate, but with the S&P 500 up 3% in July, it should be fairly close.
Source: https://www.isabelnet.com/u-s-presidential-cycle/
So while we have been talking about seasonality getting more bearish as we approach August, this new chart confirms the seasonal weakness in late summer during post election years. It actually shows that stocks tend to peak in the post election years, right about now. The data goes back 98 years.
Yields and the dollar have been moving in a similar direction with both making inverted head and shoulders since the May peak. These patterns tend to break to the upside, although head and shoulders patterns and inverted head and shoulders patterns can be considered continuation patterns, meaning they often break in the direction of the trend they were in before they formed. The 10-year Yield ($TNX) has actually been moving sideways all year, so that's not much help.
However, the dollar has been trending lower since January so while this pattern might suggest a breakout to the upside, it is possible this may eventually break to the downside. Keep an eye on last week's low near 27.05 as a possible pivot point. If it holds as the low I'd expect this chart to break upward, which would of course be a concern for the I-fund.
A rising dollar could also send oil prices lower and this chart suggests a break below $65 a barrel could mean much lower prices in the coming weeks.
This is going to be a very busy week. There is a 2-day FOMC meeting starting on Tuesday, with a policy statement and interest rate decision announced on Wednesday.
Microsoft and META report earnings after the closing bell on Wednesday this week, and Apple and Amazon report Thursday. The final Magnificent 7 company, Nvidia, is not scheduled to report until August 27.
Then we will get the July jobs report on Friday morning.
The DWCPF / S-fund widened its trading channel since the breakout above that dashed red line earlier this month. There are plenty of reasons why this could go back and fill in some open gaps or test the moving averages, but 2350 is now a support area that could hold on any pullback. If that breaks down, then we'll worry about open gaps in the channel below.
ACWX (I-fund) was down slightly on Friday with the dollar rallying, but it is trying to hold onto that rising support channel since recapturing it, last week.
BND (bonds / F-fund) was up with yields falling on Friday. It had filled an open gap on Thursday and so far that has held as support. That was after the 50-day average held the week prior, so we are seeing some dip buying in bonds.
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 may use additional methods and strategies to determine fund positions.
Stocks rallied again on Friday so that means the S&P 500 was up everyday last week. And if you're a regular reader of these commentaries you know that we've been letting everyone know that late July can be tough time for stocks historically. So much for history. The indices continue to stretch higher as the bulls have not let up. The I-fund actually led the TSP funds last week with a gain of 1.62% while small caps gained just under 1% to lag the stock funds. Bonds and the F-fund were up as well for the week at +0.37%.
(The most current commentary is always posted here: www.tsptalk.com/comments.php)
![]() | Daily TSP Funds Return![]() More returns |
We head into this new week with the S&P 500 (C-fund) at an all time high, and this weekend the US announced a major trade deal with the European Union including a 15% reciprocal tariff and the EU has agreed to buy $750 billion worth of energy products from the U.S. and invest an additional $600 billion. The futures were up about 0.40% when they opened up on Sunday evening.
So stocks will likely move up initially, but how much of this has been priced into the current market action? Will we see a sell the the news reaction after any initial reaction? It has been difficult to fight the bullish momentum of this stock market and S&P 500, which has now been up five days in a row and for four of the last five weeks. The index is currently is 289 points above its 50-day EMA (299 above the simple 50-day average) and more than 500 points above the 200-day average. All positive as far as measuring market strength, but clearly extended in the short-term.

As far as valuations go, we can use the Buffett Indicator, which is the total US Market Value divided by the GDP, to give us an idea of how expensive stocks are at any one point in history. According to Warren Buffett, "If the ratio approaches 200%, as it did in 1999, you are playing with fire."
It is currently at 220%, so it is now higher than before the Dot Com bubble burst.
There's no law that says this rally has to end now, and that makes it frustrating for both market timers and value investors, as we never know how much longer we have before an inevitable, pullback or correction begins.
Here's an interesting chart. It is the 4 year seasonal election cycle chart and we are currently through month 7 of a post election year.
The source of this chart, linked below, only showed this chart through the end of June, so I added July manually and it may not be exactly accurate, but with the S&P 500 up 3% in July, it should be fairly close.

Source: https://www.isabelnet.com/u-s-presidential-cycle/
So while we have been talking about seasonality getting more bearish as we approach August, this new chart confirms the seasonal weakness in late summer during post election years. It actually shows that stocks tend to peak in the post election years, right about now. The data goes back 98 years.
Yields and the dollar have been moving in a similar direction with both making inverted head and shoulders since the May peak. These patterns tend to break to the upside, although head and shoulders patterns and inverted head and shoulders patterns can be considered continuation patterns, meaning they often break in the direction of the trend they were in before they formed. The 10-year Yield ($TNX) has actually been moving sideways all year, so that's not much help.

However, the dollar has been trending lower since January so while this pattern might suggest a breakout to the upside, it is possible this may eventually break to the downside. Keep an eye on last week's low near 27.05 as a possible pivot point. If it holds as the low I'd expect this chart to break upward, which would of course be a concern for the I-fund.
A rising dollar could also send oil prices lower and this chart suggests a break below $65 a barrel could mean much lower prices in the coming weeks.

This is going to be a very busy week. There is a 2-day FOMC meeting starting on Tuesday, with a policy statement and interest rate decision announced on Wednesday.
Microsoft and META report earnings after the closing bell on Wednesday this week, and Apple and Amazon report Thursday. The final Magnificent 7 company, Nvidia, is not scheduled to report until August 27.
Then we will get the July jobs report on Friday morning.
The DWCPF / S-fund widened its trading channel since the breakout above that dashed red line earlier this month. There are plenty of reasons why this could go back and fill in some open gaps or test the moving averages, but 2350 is now a support area that could hold on any pullback. If that breaks down, then we'll worry about open gaps in the channel below.

ACWX (I-fund) was down slightly on Friday with the dollar rallying, but it is trying to hold onto that rising support channel since recapturing it, last week.

BND (bonds / F-fund) was up with yields falling on Friday. It had filled an open gap on Thursday and so far that has held as support. That was after the 50-day average held the week prior, so we are seeing some dip buying in bonds.

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 may use additional methods and strategies to determine fund positions.
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