06/04/25
Stocks opened lower on Tuesday, and surprise! -- the dip buyers showed up again. We saw solid gains across the board with the small caps leading the way. Small caps are up against some resistance so we have a pivot point on some charts. The I-fund lagged as the dollar bounced back, but the trend in the dollar is still down. Bonds were relatively flat as yields rebounded from morning weakness.
(The most current commentary is always posted here: www.tsptalk.com/comments.php)
This is currently one of those markets where, if you look hard enough, or think about too much, you'll find a reason to sell it. But that doesn't seem to be the right thing to do with momentum running all over the short-term indicators.
But wait, JPM's Jamie Dimon is calling for an inevitable bond market crisis? And tariffs are going to kill the economy and cause inflation. What about China's imminent threat to Taiwan? Did you see that the Russian / Ukraine war is escalating to the brink of WWIII? Oh, and June's seasonality calendar gets more bearish after this week.
Maybe it does kill the rally, but maybe it doesn't. The charts are usually telling us the entire story and we just have to know how to read the tea leaves.
Some of my biggest timing mistakes over the years is anticipating a market that is supposed to rollover, that doesn't. At least it took a lot longer than I expected. Does that mean we should never sell? No, the charts will flash us warnings signs, whether or not the headlines are in agreement yet.
Yesterday's bullish market action came on the heals of all of those concerns above and yet look at the lopsided market breadth in the advance / decline numbers.
I have no doubt that my TSP Talk Plus Trading system is going to be flashing warnings signs this week because of the extended, overbought charts, and overly bullish indicators. That's the science behind some market timing strategies. But there are intangibles that we also take into consideration and what to do with all of that information is part of the art of market timing. It's not always easy, but when you can get both sides working, you can do pretty well timing the stocks market.
Yesterday was an important day because traders and investors were once again willing to pay more for stocks than they had since the early stages of the tariff tantrum. The S&P 500 (C-fund) closed at its highest level since February 24th. However, we can see that it needs a little more nudge to close above the the May 19th high, which is currently the lower red horizontal resistance line that is in the way of testing the February highs. There is also a rising resistance line (blue), which was a support line until it was broken just a few days ago. That resistance is rising however, and this could ride below that rising resistance without any problems, but it would be best to see 6000+ to get past that first barrier. I still think that high volume positive reversal last Friday was meaningful.
Here's the Russell 2000 small caps index, which is not the S-fund, but all of the stocks in the Russell 2000 are in the S-fund. This is still a bullish looking chart but we'll have to see how formidable this resistance near 210 will be on this chart.
The 10-year Treasury Yield was down slightly yesterday but it was basically flat after bouncing off of its blue rising resistance line coming off the prior lows. The 50-day moving average in purple is also holding as resistance, but the trading over the last few months hasn't shown this average to have a whole lot of influence on the chart. What is working is the red upward sloping trading channel with a few volatile breakouts Those breakouts did cause volatility in the stock market as well. Right now the 10-year Yield is right in the middle of that channel so there's not much concern at the moment. If we start seeing a move north of 4.6%, then the stock market may get cranky again.
The F-fund moves counter to yields and its channel in red is sloping downward. The 50-day EMA is acting as support here as well, and its blue resistance line is falling and in play - almost a mirror image of the 10-year yield chart.
If we start seeing some of these charts going past their comforts levels, whether it's bond yields or the S&P 500, then we may want to get a little more defensive, but right now stocks are leaping over that wall of worry. Oh, and if I start sounding too cocky, look for a change in the market character. Are we there yet? :^)
Crowdstrike was down heavily after hours yesterday after making a new high during the day. It's not usually a market mover but I suppose it could be a hint to start taking profits in some of the other high flyers. There I go again, reaching for a reason that stocks will rollover. Stop it! When the dip buyers stop showing up, then we may have a reason. It could happen to day, or weeks from now. But it hasn't happened yet.
The DWCPF (S-fund) is consolidating nicely but it is yet to breakout. Unlike the small caps of the Russell 2000 however, it is well above its 200-day EMA. A breakout above 2250 would be a ideal. The longer it stalls below resistance, the bears may try to put on some pressure.
ACWX (I-fund) lagged yesterday with the dollar (UUP) up 0.66%. It is still churning mostly sideways since the move to 60 eight trading days ago. There is a saying that flat tops bring market drops, but a little pullback here, to about 57.50, would not be terrible.
BND (bonds / F-fund) was down slightly as noted above, but here's the chart again for reference.
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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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 opened lower on Tuesday, and surprise! -- the dip buyers showed up again. We saw solid gains across the board with the small caps leading the way. Small caps are up against some resistance so we have a pivot point on some charts. The I-fund lagged as the dollar bounced back, but the trend in the dollar is still down. Bonds were relatively flat as yields rebounded from morning weakness.
(The most current commentary is always posted here: www.tsptalk.com/comments.php)
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This is currently one of those markets where, if you look hard enough, or think about too much, you'll find a reason to sell it. But that doesn't seem to be the right thing to do with momentum running all over the short-term indicators.
But wait, JPM's Jamie Dimon is calling for an inevitable bond market crisis? And tariffs are going to kill the economy and cause inflation. What about China's imminent threat to Taiwan? Did you see that the Russian / Ukraine war is escalating to the brink of WWIII? Oh, and June's seasonality calendar gets more bearish after this week.
Maybe it does kill the rally, but maybe it doesn't. The charts are usually telling us the entire story and we just have to know how to read the tea leaves.
Some of my biggest timing mistakes over the years is anticipating a market that is supposed to rollover, that doesn't. At least it took a lot longer than I expected. Does that mean we should never sell? No, the charts will flash us warnings signs, whether or not the headlines are in agreement yet.
Yesterday's bullish market action came on the heals of all of those concerns above and yet look at the lopsided market breadth in the advance / decline numbers.
I have no doubt that my TSP Talk Plus Trading system is going to be flashing warnings signs this week because of the extended, overbought charts, and overly bullish indicators. That's the science behind some market timing strategies. But there are intangibles that we also take into consideration and what to do with all of that information is part of the art of market timing. It's not always easy, but when you can get both sides working, you can do pretty well timing the stocks market.
Yesterday was an important day because traders and investors were once again willing to pay more for stocks than they had since the early stages of the tariff tantrum. The S&P 500 (C-fund) closed at its highest level since February 24th. However, we can see that it needs a little more nudge to close above the the May 19th high, which is currently the lower red horizontal resistance line that is in the way of testing the February highs. There is also a rising resistance line (blue), which was a support line until it was broken just a few days ago. That resistance is rising however, and this could ride below that rising resistance without any problems, but it would be best to see 6000+ to get past that first barrier. I still think that high volume positive reversal last Friday was meaningful.
Here's the Russell 2000 small caps index, which is not the S-fund, but all of the stocks in the Russell 2000 are in the S-fund. This is still a bullish looking chart but we'll have to see how formidable this resistance near 210 will be on this chart.
The 10-year Treasury Yield was down slightly yesterday but it was basically flat after bouncing off of its blue rising resistance line coming off the prior lows. The 50-day moving average in purple is also holding as resistance, but the trading over the last few months hasn't shown this average to have a whole lot of influence on the chart. What is working is the red upward sloping trading channel with a few volatile breakouts Those breakouts did cause volatility in the stock market as well. Right now the 10-year Yield is right in the middle of that channel so there's not much concern at the moment. If we start seeing a move north of 4.6%, then the stock market may get cranky again.
The F-fund moves counter to yields and its channel in red is sloping downward. The 50-day EMA is acting as support here as well, and its blue resistance line is falling and in play - almost a mirror image of the 10-year yield chart.
If we start seeing some of these charts going past their comforts levels, whether it's bond yields or the S&P 500, then we may want to get a little more defensive, but right now stocks are leaping over that wall of worry. Oh, and if I start sounding too cocky, look for a change in the market character. Are we there yet? :^)
Crowdstrike was down heavily after hours yesterday after making a new high during the day. It's not usually a market mover but I suppose it could be a hint to start taking profits in some of the other high flyers. There I go again, reaching for a reason that stocks will rollover. Stop it! When the dip buyers stop showing up, then we may have a reason. It could happen to day, or weeks from now. But it hasn't happened yet.
The DWCPF (S-fund) is consolidating nicely but it is yet to breakout. Unlike the small caps of the Russell 2000 however, it is well above its 200-day EMA. A breakout above 2250 would be a ideal. The longer it stalls below resistance, the bears may try to put on some pressure.
ACWX (I-fund) lagged yesterday with the dollar (UUP) up 0.66%. It is still churning mostly sideways since the move to 60 eight trading days ago. There is a saying that flat tops bring market drops, but a little pullback here, to about 57.50, would not be terrible.
BND (bonds / F-fund) was down slightly as noted above, but here's the chart again for reference.
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.
