05/27/25
Stocks were down on Friday capping off a sub par week for the C, S, and F-funds as we had a textbook pre-holiday reversal phenomenon play out. The I-fund did manage a moderate gain as the dollar pulled back - perhaps also part of the pre-holiday reversal. There was some tariff talk surrounding the EU triggering the weakness late last week, but things were looking better in the futures market over the long weekend.
Last week was a tough week for the stock market but the pullback came right on cue as the pre-holiday reversal broke the larger positive trend, and now this week the post holiday week is supposed to resume that positive trend. The futures are pointing towards a strong start for the stock market on Tuesday - at least as of this writing on Monday afternoon, but you can't always trust a Monday morning (Tuesday in this case) gap open.
Higher bond yields have been causing some concerns after the 10-year Treasury Yield hit multi-month highs last week, but so far they have remained contained within this year's range, and they were actually higher in January, and stocks did quite well that month. There's forces on both sides keeping this in that range we see below with the higher yields being caused by the potential for more economic growth than many had expected, but also the speculation that higher tariffs may keep inflation sticky on the high side. Ironically what may keep yields down is a weak economy and we really need to watch the housing market which was getting too hot in recent years and may need some adjusting. If this stays with 4.1% and 4.7% the stock market will likely be just fine. Once we see extremes, that could change.
The dollar (UUP) had been rebounding off the April lows but last week it started to pull back again, and as I said above, it may have been part of that pre-holiday reversal phenomenon, but we'll have to see if that holds true this week when we'd expect the reversal to turnaround this week. I mentioned last week that the Trump administration has been trying to keep both the 10-year yield and the dollar lower to stimulate growth, so this week will be a good test of the post-holiday effect.
We can see the holiday reversal last week quite clearly on the S&P 500 (C-fund) after four straight down days, and this would be a good place for that pullback to stop with all of that support in the area, although the bottom of the rising trading channel in blue was taken broken on Friday. Even if we do see more downside, there is plenty of support between 5650 and 5780, including the bottom of an open gap, to give the dip buyers a reason to jump in.
I have been talking about liquidity and the money supply lately, and I don't see any reason to back down from the theory that the 10-12 week lag of the spike in global M2 money supply (yellow) is going to help the stock market this quarter. Bitcoin traders are very much aware of the effect liquidity has and that's where I got this chart, and that is what this chart is tracking; it is the price of bitcoin versus a "90 day offset" (10-12 week lag), and you can see that there is a lot more potential to come.

It's not just bitcoin that benefits, but many assets including gold and other commodities, and of course the stock market.
This 4-day holiday shortened week will be a fairly busy week for economic data including Consumer Confidence, FOMC meeting minutes, GDP data, PCE inflation data, Chicago PMI, and the final Michigan Consumer Sentiment reading for May.
The DWCPF (S-fund) was down for four straight days last week but on Friday it closed near the highs of the day, and despite the losses, it was an impressive reversal day being able to close above the 50, 100, and 200 day averages after threatening to lose them. Getting back above 2175 is the next job, otherwise a test of the 50-day average may be possible, although Friday's action may be telling us that the dip buyers aren't going to wait that long.
ACWX (I-fund) had made a negative outside reversal day on Wednesday of last week, but on Friday it actually came back with a positive outside reversal day. The resilience of this fund has been impressive, but again, keep your eye on the dollar this week. If it bounced back from last week's pullback, the I-fund may have some work to do to keep outperforming the US funds.
BND (bonds / F-fund) has been in some trouble lately but the 200-day EMA held yet again and is doing a good job of supporting this chart. The shorter term trend is still down with yield trending higher, so this week will be a really good test for the bond market.
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
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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 may use additional methods and strategies to determine fund positions.
Stocks were down on Friday capping off a sub par week for the C, S, and F-funds as we had a textbook pre-holiday reversal phenomenon play out. The I-fund did manage a moderate gain as the dollar pulled back - perhaps also part of the pre-holiday reversal. There was some tariff talk surrounding the EU triggering the weakness late last week, but things were looking better in the futures market over the long weekend.
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Last week was a tough week for the stock market but the pullback came right on cue as the pre-holiday reversal broke the larger positive trend, and now this week the post holiday week is supposed to resume that positive trend. The futures are pointing towards a strong start for the stock market on Tuesday - at least as of this writing on Monday afternoon, but you can't always trust a Monday morning (Tuesday in this case) gap open.
Higher bond yields have been causing some concerns after the 10-year Treasury Yield hit multi-month highs last week, but so far they have remained contained within this year's range, and they were actually higher in January, and stocks did quite well that month. There's forces on both sides keeping this in that range we see below with the higher yields being caused by the potential for more economic growth than many had expected, but also the speculation that higher tariffs may keep inflation sticky on the high side. Ironically what may keep yields down is a weak economy and we really need to watch the housing market which was getting too hot in recent years and may need some adjusting. If this stays with 4.1% and 4.7% the stock market will likely be just fine. Once we see extremes, that could change.

The dollar (UUP) had been rebounding off the April lows but last week it started to pull back again, and as I said above, it may have been part of that pre-holiday reversal phenomenon, but we'll have to see if that holds true this week when we'd expect the reversal to turnaround this week. I mentioned last week that the Trump administration has been trying to keep both the 10-year yield and the dollar lower to stimulate growth, so this week will be a good test of the post-holiday effect.
We can see the holiday reversal last week quite clearly on the S&P 500 (C-fund) after four straight down days, and this would be a good place for that pullback to stop with all of that support in the area, although the bottom of the rising trading channel in blue was taken broken on Friday. Even if we do see more downside, there is plenty of support between 5650 and 5780, including the bottom of an open gap, to give the dip buyers a reason to jump in.

I have been talking about liquidity and the money supply lately, and I don't see any reason to back down from the theory that the 10-12 week lag of the spike in global M2 money supply (yellow) is going to help the stock market this quarter. Bitcoin traders are very much aware of the effect liquidity has and that's where I got this chart, and that is what this chart is tracking; it is the price of bitcoin versus a "90 day offset" (10-12 week lag), and you can see that there is a lot more potential to come.

It's not just bitcoin that benefits, but many assets including gold and other commodities, and of course the stock market.
This 4-day holiday shortened week will be a fairly busy week for economic data including Consumer Confidence, FOMC meeting minutes, GDP data, PCE inflation data, Chicago PMI, and the final Michigan Consumer Sentiment reading for May.
The DWCPF (S-fund) was down for four straight days last week but on Friday it closed near the highs of the day, and despite the losses, it was an impressive reversal day being able to close above the 50, 100, and 200 day averages after threatening to lose them. Getting back above 2175 is the next job, otherwise a test of the 50-day average may be possible, although Friday's action may be telling us that the dip buyers aren't going to wait that long.

ACWX (I-fund) had made a negative outside reversal day on Wednesday of last week, but on Friday it actually came back with a positive outside reversal day. The resilience of this fund has been impressive, but again, keep your eye on the dollar this week. If it bounced back from last week's pullback, the I-fund may have some work to do to keep outperforming the US funds.

BND (bonds / F-fund) has been in some trouble lately but the 200-day EMA held yet again and is doing a good job of supporting this chart. The shorter term trend is still down with yield trending higher, so this week will be a really good test for the bond market.

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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