12/12/25
Stocks rallied on Thursday despite a headwind from the tech sector. The indices opened lower as investors were concerned about the disappointing earnings report from Oracle, but the Fed's new outlook trumped the earnings and stocks rallied with small caps continuing to outperform, thanks to the dovish momentary policies. The Dow and S&P 500 closed at all time highs, as did the Russell 2000. Yield and the dollar fell, helping out the rally in stocks.
Oracle disappointed putting the pressure on the Nasdaq on Thursday, and now Broadcom was down sharply after hours after reporting last night. Are the headwinds starting to blow or will the bullish momentum rollover these tech issues?
The market can be thrown a curveball at any time, but with the Fed's monetary policies lining up with the propensity for a year end rally, we probably shouldn't over think it too much - at least not until early next year. Don't fight the Fed. Don't fight the Santa Claus rally.
We have seen some disappointing Decembers over the years but on average it pays to be invested, especially when the charts and the Fed are in agreement. We can add sentiment to the mix as investors just haven't trusted this market - and that is fuel for more upside, unless some of these investors want to miss the entire rally.
This latest AAII Investor Sentiment Survey shows fewer than 50% of the respondents say they are bullish, and the current 1.5 to 1 bulls to bears ratio is neutral but it's the highest since January. At least it is off those sub 1 to 1 ratios.
You can see what happened in late 2023 when investors finally got as bullish as they are now after being bearish in the summer of 2023.
Last I checked, our latest TSP Talk Sentiment Survey showed 70% bulls and 19% bears for a bulls to bears ratio of 3.7 to 1. That's quite a difference. I would normally call this too bullish and a warning sign, but our readers have been more right in recent years than the general Wall Street population, and you can see the success many have had in the AutoTracker standings. As always, you can receive an email each morning before the transaction deadline to see who is making a move that day. That is our popular Last Look Report service for just $5 or $10 a month.
But I digress. Here's the S&P 500 (C-fund) which closed at a new all time high, although it is still just off the intraday highs from the previous FOMC meeting peak. The F-flag remains intact. As I have said before, these formation tend to eventually break down, but trying to anticipate when that will happen isn't easy, and you can miss days or weeks of gains trying to do so.
With the Transportation Index and small caps (Russell 2000) already making new highs, the S&P 500 is normally not far behind.
The 10-year Treasury Yield fell sharply early on Thursday, but battled back to fill in the open gap it had created. The early action pushed it below several layers of support, but that rally off the lows helped it close back above one of the support lines and the 50-day average. That leaves it in a uncommitted position. Conventional thinking would have us believe that yields are going lower since the Fed is cutting rates, but the bond market knows more than we know, so I will trust it to tell us soon, rather than trust what we think it will do.
The dollar has broken down, and that makes sense to me with QT ending and rates coming down, but I have to admit that the dollar does not always do what makes sense to me. A weak dollar can help push stock and commodity prices higher. Unfortunately than can be inflationary at some point, but that's what inflation is - higher prices.
Some economic data that is supposed to be released in December has been pushed out until January because of lack of sufficient data caused by the government shutdown. I see that as a tailwind for stocks through the end of the year because it eliminates some potential end of year hiccups.
The DWCPF Index (S-Fund) broke out to a new high and while it did hit that old support line, which may turn out to be resistance, that resistance is rising at a healthy pace, so it doesn't mean the rally is over yet. But this has come long way in a short amount of time and it may be running on holiday cheer at this point. The momentum is behind it but we could see the occasional bout of profit taking or tax selling in the coming week or so.
ACWX (I-fund) made a new high so the triple top is no more, if it can hold for another couple of days. The sell off in the dollar is a good catalyst and it looks like the 200-day average may be the next target for UUP.
BND (bonds / F-fund) was up early and down late to close flat on the day. It's a bullish looking chart but this one rarely goes straight up or straight down, so some backing and filling after the big gain on Wednesday isn't a surprise.
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 use additional methods and strategies to determine fund positions.
Stocks rallied on Thursday despite a headwind from the tech sector. The indices opened lower as investors were concerned about the disappointing earnings report from Oracle, but the Fed's new outlook trumped the earnings and stocks rallied with small caps continuing to outperform, thanks to the dovish momentary policies. The Dow and S&P 500 closed at all time highs, as did the Russell 2000. Yield and the dollar fell, helping out the rally in stocks.
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Oracle disappointed putting the pressure on the Nasdaq on Thursday, and now Broadcom was down sharply after hours after reporting last night. Are the headwinds starting to blow or will the bullish momentum rollover these tech issues?
The market can be thrown a curveball at any time, but with the Fed's monetary policies lining up with the propensity for a year end rally, we probably shouldn't over think it too much - at least not until early next year. Don't fight the Fed. Don't fight the Santa Claus rally.
We have seen some disappointing Decembers over the years but on average it pays to be invested, especially when the charts and the Fed are in agreement. We can add sentiment to the mix as investors just haven't trusted this market - and that is fuel for more upside, unless some of these investors want to miss the entire rally.
This latest AAII Investor Sentiment Survey shows fewer than 50% of the respondents say they are bullish, and the current 1.5 to 1 bulls to bears ratio is neutral but it's the highest since January. At least it is off those sub 1 to 1 ratios.
You can see what happened in late 2023 when investors finally got as bullish as they are now after being bearish in the summer of 2023.
Last I checked, our latest TSP Talk Sentiment Survey showed 70% bulls and 19% bears for a bulls to bears ratio of 3.7 to 1. That's quite a difference. I would normally call this too bullish and a warning sign, but our readers have been more right in recent years than the general Wall Street population, and you can see the success many have had in the AutoTracker standings. As always, you can receive an email each morning before the transaction deadline to see who is making a move that day. That is our popular Last Look Report service for just $5 or $10 a month.
But I digress. Here's the S&P 500 (C-fund) which closed at a new all time high, although it is still just off the intraday highs from the previous FOMC meeting peak. The F-flag remains intact. As I have said before, these formation tend to eventually break down, but trying to anticipate when that will happen isn't easy, and you can miss days or weeks of gains trying to do so.
With the Transportation Index and small caps (Russell 2000) already making new highs, the S&P 500 is normally not far behind.
The 10-year Treasury Yield fell sharply early on Thursday, but battled back to fill in the open gap it had created. The early action pushed it below several layers of support, but that rally off the lows helped it close back above one of the support lines and the 50-day average. That leaves it in a uncommitted position. Conventional thinking would have us believe that yields are going lower since the Fed is cutting rates, but the bond market knows more than we know, so I will trust it to tell us soon, rather than trust what we think it will do.
The dollar has broken down, and that makes sense to me with QT ending and rates coming down, but I have to admit that the dollar does not always do what makes sense to me. A weak dollar can help push stock and commodity prices higher. Unfortunately than can be inflationary at some point, but that's what inflation is - higher prices.
Some economic data that is supposed to be released in December has been pushed out until January because of lack of sufficient data caused by the government shutdown. I see that as a tailwind for stocks through the end of the year because it eliminates some potential end of year hiccups.
The DWCPF Index (S-Fund) broke out to a new high and while it did hit that old support line, which may turn out to be resistance, that resistance is rising at a healthy pace, so it doesn't mean the rally is over yet. But this has come long way in a short amount of time and it may be running on holiday cheer at this point. The momentum is behind it but we could see the occasional bout of profit taking or tax selling in the coming week or so.
ACWX (I-fund) made a new high so the triple top is no more, if it can hold for another couple of days. The sell off in the dollar is a good catalyst and it looks like the 200-day average may be the next target for UUP.
BND (bonds / F-fund) was up early and down late to close flat on the day. It's a bullish looking chart but this one rarely goes straight up or straight down, so some backing and filling after the big gain on Wednesday isn't a surprise.
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 use additional methods and strategies to determine fund positions.
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