11/24/25
Stocks had a nice come back day on Friday after Thursday's disastrous negative reversal. The 1% gain in the S&P 500 was certainly welcomed and a relief, but once again we saw weakness in the final hour of trading and that 1% gain was about half of the mid-afternoon highs. Small caps did show more resilience by hanging onto a 2% gain, and that is a good sign, but the charts still need some help.
The weight on the stock market recently had a lot to do with the Federal Reserve changing their outlook on interest rates to a more hawkish stance, but on Friday several Fed members gave speeches and the New York Fed President suggested that the central bank could cut interest rates yet again this year.
"I view monetary policy as being modestly restrictive, although somewhat less so than before our recent actions,” Williams said in remarks for a speech in Santiago, Chile. “Therefore, I still see room for a further adjustment in the near term to the target range for the federal funds rate to move the stance of policy closer to the range of neutral, thereby maintaining the balance between the achievement of our two goals."
That sent the odds of a rate cut near 30% a couple of days ago, up to 71%.
That sent yields lower and investors became more willing to do some buying in stocks.
The dollar has remained strong since the July lows and September's successful test of those low, and that help put some pressure on prices.
The S&P 500 (C-fund) posted that 1% gain but you can see Friday's candlestick left a negative tail after failing near the 50-day average (purple.) 444 of the 500 stocks in the S&P 500 were up on Friday, and that's the most since May, and there does seem to be some support around that orange moving average.
The weekly chart also shows support at the 20-week moving average, something that has been fairly reliable in all but the worst market corrections.
The monthly chart created some interesting situations this fall when it moved above the longer term resistance line. Getting above resistance is generally good as it opens a door to higher prices, and this recent pullback cleaned up a bit by coming back to test that old resistance as support. So far it has held, but this is extended and we may be dealing with this again next year.
If we go back further you can see that resistance line goes all the way back to the peak prior to the financial crisis in 2007. Again, breaking resistance is usually a good thing, but clearly this is pushing the upper limits of any type of long term trading channel, and realistically, the S&P 500 could come all the way down to between 4000 and 5000 and remain in the bullish channel.
Holiday seasonality should favor the bulls this week, but volatility is elevated and the calendar may not be as big of a factor because of the short-term situation, and it is basically at the mercy of the Fed's outlook on interest rates heading into next month's FOMC meeting.
The economic calendar is busy this week with the PPI wholesale inflation data on Tuesday, which will also have an impact on interest rates.
The DWCPF Index (S-Fund) has been taking a beating this month but it is trying to hold at that 20-day average, which is a convenient place for a pullback to find support. The trend is still down as the descending channel remains intact off the October peak.
ACWX (I-fund) rebounded 1% on Friday, although the TSP only gave the I-fund a 0.77% gain. That could be made up today, but the dollar has been hot and may need to cool down if this fund wants to start outperforming again. The pullback this month hasn't been as severe in the I-fund, and like the S&P 500 chart, it is trying to hold at the October lows.
BND (bonds / F-fund) rallied on the comments by New York Fed President Williams. Bond prices go up when yields come down, and Williams suggested interest rates may be coming down in December, and yields acted in kind.
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.
Stocks had a nice come back day on Friday after Thursday's disastrous negative reversal. The 1% gain in the S&P 500 was certainly welcomed and a relief, but once again we saw weakness in the final hour of trading and that 1% gain was about half of the mid-afternoon highs. Small caps did show more resilience by hanging onto a 2% gain, and that is a good sign, but the charts still need some help.
| Daily TSP Funds Return
More returns |
The weight on the stock market recently had a lot to do with the Federal Reserve changing their outlook on interest rates to a more hawkish stance, but on Friday several Fed members gave speeches and the New York Fed President suggested that the central bank could cut interest rates yet again this year.
"I view monetary policy as being modestly restrictive, although somewhat less so than before our recent actions,” Williams said in remarks for a speech in Santiago, Chile. “Therefore, I still see room for a further adjustment in the near term to the target range for the federal funds rate to move the stance of policy closer to the range of neutral, thereby maintaining the balance between the achievement of our two goals."
That sent the odds of a rate cut near 30% a couple of days ago, up to 71%.
That sent yields lower and investors became more willing to do some buying in stocks.
The dollar has remained strong since the July lows and September's successful test of those low, and that help put some pressure on prices.
The S&P 500 (C-fund) posted that 1% gain but you can see Friday's candlestick left a negative tail after failing near the 50-day average (purple.) 444 of the 500 stocks in the S&P 500 were up on Friday, and that's the most since May, and there does seem to be some support around that orange moving average.
The weekly chart also shows support at the 20-week moving average, something that has been fairly reliable in all but the worst market corrections.
The monthly chart created some interesting situations this fall when it moved above the longer term resistance line. Getting above resistance is generally good as it opens a door to higher prices, and this recent pullback cleaned up a bit by coming back to test that old resistance as support. So far it has held, but this is extended and we may be dealing with this again next year.
If we go back further you can see that resistance line goes all the way back to the peak prior to the financial crisis in 2007. Again, breaking resistance is usually a good thing, but clearly this is pushing the upper limits of any type of long term trading channel, and realistically, the S&P 500 could come all the way down to between 4000 and 5000 and remain in the bullish channel.
Holiday seasonality should favor the bulls this week, but volatility is elevated and the calendar may not be as big of a factor because of the short-term situation, and it is basically at the mercy of the Fed's outlook on interest rates heading into next month's FOMC meeting.
The economic calendar is busy this week with the PPI wholesale inflation data on Tuesday, which will also have an impact on interest rates.
The DWCPF Index (S-Fund) has been taking a beating this month but it is trying to hold at that 20-day average, which is a convenient place for a pullback to find support. The trend is still down as the descending channel remains intact off the October peak.
ACWX (I-fund) rebounded 1% on Friday, although the TSP only gave the I-fund a 0.77% gain. That could be made up today, but the dollar has been hot and may need to cool down if this fund wants to start outperforming again. The pullback this month hasn't been as severe in the I-fund, and like the S&P 500 chart, it is trying to hold at the October lows.
BND (bonds / F-fund) rallied on the comments by New York Fed President Williams. Bond prices go up when yields come down, and Williams suggested interest rates may be coming down in December, and yields acted in kind.
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.
