10/17/25
October continues to act like October, packed with volatility. Once again we saw stocks open higher, peak in early trading, and then drift lower the rest of the day. There was a slight pop in the final hour of trading but unlike Wednesday, on Thursday the S&P and Nasdaq could not make it back into positive territory. Yields and the dollar fell as concerns about the economy were sparked, but that's just fodder for the Fed's interest rate cuts.
The August and September seasonality charts did not live up to their bearish reputations, but so far October has. October is not a bearish month historically, but it is a volatile month, so it may continue for a while longer. Since 1945, October has averaged a gain of 0.90% - somewhere in the middle of the pack of all months. Six months have better returns, and five months have lower average returns.
Source: www.sentimentrader.com
We saw a similar shake out last October, and ...
... many others over the last year. Other than the Tariff Tantrum in March and April earlier this year, most of the these pullbacks have been muted and buyable. Of course we can only tell that after the fact.
The S&P 500 (C-fund) looked bad yesterday as the morning strength was sold again, but if you take the emotion out of it, the chart remains inside the trading channel and so far the bottom of that channel has held at each test. That could change today, but it hasn't yet and that means Wall Street is still buying that support.
I mentioned the VIX (Volatility Index) yesterday and on Thursday it shot up another 22% to close above 25. A VIX of 25 means the market is pricing in swings of about 1.6% in the S&P 500. Yesterday the S&P traded in a range of 1.7% (low to high), so we got about what the VIX said we'd get.
The 10-year Treasury Yield was slammed yesterday on that concern for the economy, and it closed below 4% and at the lowest level of the year. Some saw this as a problem, but think this is telling us is that the market is dismissing the inflation concerns. It also opens the door to the Fed interest rate cuts, if there were any doubts that more were coming.
The dollar also pulled back and it is now in an interesting position, after that red 200-day simple moving average acted as resistance recently. After breaking above the blue 200-day EMA (exponential) that average may now try to act as support.
The market leading Dow Transportation Index, which hasn't been the best leader this year, actually rallied 1% yesterday, but once again it failed at the upper resistance line, however it did recapture its 50-day EMA line (purple.) Now what?
We did not get the PPI - Producer Price Index yesterday as was scheduled. Nor did we get the Retail Sales data as the government shutdown persists. The CPI Report is on the schedule for next week, so I assume that is in jeopardy as well.
For the 4th day in the last 5, DWCPF Index (S-Fund) has knocked on the door of the bottom of the trading channel. You don't want to knock too many times because eventually someone is going to open that door. For now, it looks OK, and with interest rates coming down, this could just be October volatility - as well as the concerns about economic growth.
ACWX (I-fund) was up yesterday with the assist from a big drop in the dollar, and the fact that the overseas market closed before the US stocks started to tank on Thursday. This fund may feel a hangover on Friday if the TSP does not make some kind of adjustment to Thursday's price.
BND (bonds / F-fund) blasted through the upper resistance line again, and as I mentioned earlier this week, we'd have to see the 10-year Treasury Yield fall below 4% to get there, and we got that yesterday.
Thanks so much for reading! Have a great weekend!
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.
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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.
October continues to act like October, packed with volatility. Once again we saw stocks open higher, peak in early trading, and then drift lower the rest of the day. There was a slight pop in the final hour of trading but unlike Wednesday, on Thursday the S&P and Nasdaq could not make it back into positive territory. Yields and the dollar fell as concerns about the economy were sparked, but that's just fodder for the Fed's interest rate cuts.
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The August and September seasonality charts did not live up to their bearish reputations, but so far October has. October is not a bearish month historically, but it is a volatile month, so it may continue for a while longer. Since 1945, October has averaged a gain of 0.90% - somewhere in the middle of the pack of all months. Six months have better returns, and five months have lower average returns.
Source: www.sentimentrader.com
We saw a similar shake out last October, and ...
... many others over the last year. Other than the Tariff Tantrum in March and April earlier this year, most of the these pullbacks have been muted and buyable. Of course we can only tell that after the fact.
The S&P 500 (C-fund) looked bad yesterday as the morning strength was sold again, but if you take the emotion out of it, the chart remains inside the trading channel and so far the bottom of that channel has held at each test. That could change today, but it hasn't yet and that means Wall Street is still buying that support.
I mentioned the VIX (Volatility Index) yesterday and on Thursday it shot up another 22% to close above 25. A VIX of 25 means the market is pricing in swings of about 1.6% in the S&P 500. Yesterday the S&P traded in a range of 1.7% (low to high), so we got about what the VIX said we'd get.
The 10-year Treasury Yield was slammed yesterday on that concern for the economy, and it closed below 4% and at the lowest level of the year. Some saw this as a problem, but think this is telling us is that the market is dismissing the inflation concerns. It also opens the door to the Fed interest rate cuts, if there were any doubts that more were coming.
The dollar also pulled back and it is now in an interesting position, after that red 200-day simple moving average acted as resistance recently. After breaking above the blue 200-day EMA (exponential) that average may now try to act as support.
The market leading Dow Transportation Index, which hasn't been the best leader this year, actually rallied 1% yesterday, but once again it failed at the upper resistance line, however it did recapture its 50-day EMA line (purple.) Now what?
We did not get the PPI - Producer Price Index yesterday as was scheduled. Nor did we get the Retail Sales data as the government shutdown persists. The CPI Report is on the schedule for next week, so I assume that is in jeopardy as well.
For the 4th day in the last 5, DWCPF Index (S-Fund) has knocked on the door of the bottom of the trading channel. You don't want to knock too many times because eventually someone is going to open that door. For now, it looks OK, and with interest rates coming down, this could just be October volatility - as well as the concerns about economic growth.
ACWX (I-fund) was up yesterday with the assist from a big drop in the dollar, and the fact that the overseas market closed before the US stocks started to tank on Thursday. This fund may feel a hangover on Friday if the TSP does not make some kind of adjustment to Thursday's price.
BND (bonds / F-fund) blasted through the upper resistance line again, and as I mentioned earlier this week, we'd have to see the 10-year Treasury Yield fall below 4% to get there, and we got that yesterday.
Thanks so much for reading! Have a great weekend!
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.
