04/27/26
We saw more new highs in the large cap indices on Friday but the winners have been getting more narrow recently as the broader and non-tech indices lagged. We come into this new week with the war still officially on and the ceasefire talks stalling, and of course a dramatic event in Washington over the weekend with another potential assassin was stopped. Will this impact the markets?
The action on Friday was bifurcated with large cap tech doing remarkably well but the rest of the market was just OK. More stocks were positive than negative overall, but the NYSE actually saw negative share volume breadth. The S&P 500 made a new 52-week high with that 0.80% gain, but...
... those same 500 stocks were down on Friday when weighted equally, so the S&P 500 is being bolstered by big tech.
That doesn't mean anything to those in the C-fund because you get the gains regardless, but it may be saying something about the internal health of the market. Not that it is looking bearish, but it has come a long way in a short time and may be in some need of a breather.
Of course big tech could carry the index and this is a massive week for tech earnings as 5 of the Mag 7 companies report this week. But it may say something about the other 493 stocks in the S&P 500, plus the other 4500 or so that are in the S-fund.
The market has come a long way since the lows, and it is very likely that the lows are in for now, although history does suggest we could see another correction in the second half of a midterm election year. But if you are getting bearish because we are still involved in a war with Iran, history is also on the bulls' side.
Even during World War II the Dow bottomed in April of 1942 and the war went on for another three years. I heard Tom Lee say there's a theory of, sell the set up, buy the bullet when a war is in the picture.
The recent breakout to new highs over 7000 on the S&P 500 is bullish by definition, but as we have seen a few times, sometimes a breakout is the last hurrah before another dip - right after they've lured in some of the last remaining bears into buying.
It may depend on how the oil market goes from here. The price of oil has been very sticky to the 100 area, but as we talked about, this could be the right shoulder of a head and shoulders pattern, which could mean an eventual breakdown once that shoulder is completed. That's pure technical analysis and not related to what's going on around the world.
The 10-year Treasury Yield was down slightly on Friday, but it is still showing strength as it broke above the recent descending resistance line, following the path of the price of oil.
The longer-term chart shows that rates have been fairly stable and it is currently where it was near the end of 2022, and several other times in the interim.
Semiconductors were up for an 18th straight trading day on Friday following Intel's earnings report.
Magnificent 7 earnings come in hot this week: On Wednesday after the closing bell we get reports from: Microsoft (MSFT), Alphabet (GOOGL), Meta Platforms (META), and Amazon (AMZN). And on Thursday Apple (AAPL) reports.
Expectations are high after some blow out earnings from Intel and the semiconductors as a whole. Is this the set up for disappointment or is the AI trade ready to take it to another level?
We have an FOMC meeting this week with a decision on interest rates being announced on Wednesday. There is virtually no one expecting a change in rates at this meeting.
We will get the PCE Prices inflation data on Thursday.
Additional TSP Fund Charts:
DWCPF (S-fund) made a new high early last week but has drifted lower since. The old breakout line has been holding as support so far and the bottom of Thursday's positive reversal day mostly filled in the open gap (blue.) Technically the gap could still be open until it gets to the closing price on April 16 of 2639. And of course the red boxes are gaps that are still wide open. The rising support line was broken late last week, but that angle of incline was not sustainable so that was to be expected at some point.
ACWX (I-fund) has been lagging the most as the higher price of oil really negatively impacted the international markets. The recent pullback low came conveniently on the 20-day average, which had been a very meaningful area of support on this chart before the war started. This chart also broke the ascending support line late last week.
BND (bonds / F-fund) has been doing a good job of holding at the old, elongated wedge formation. With yields looking like they want to go higher, this chart has some issues, but it may all depend on where oil goes from here as yields are following oil, and this chart moves in the opposite direction to yields.
Thanks so much for reading! See you 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
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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.
We saw more new highs in the large cap indices on Friday but the winners have been getting more narrow recently as the broader and non-tech indices lagged. We come into this new week with the war still officially on and the ceasefire talks stalling, and of course a dramatic event in Washington over the weekend with another potential assassin was stopped. Will this impact the markets?
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The action on Friday was bifurcated with large cap tech doing remarkably well but the rest of the market was just OK. More stocks were positive than negative overall, but the NYSE actually saw negative share volume breadth. The S&P 500 made a new 52-week high with that 0.80% gain, but...
... those same 500 stocks were down on Friday when weighted equally, so the S&P 500 is being bolstered by big tech.
That doesn't mean anything to those in the C-fund because you get the gains regardless, but it may be saying something about the internal health of the market. Not that it is looking bearish, but it has come a long way in a short time and may be in some need of a breather.
Of course big tech could carry the index and this is a massive week for tech earnings as 5 of the Mag 7 companies report this week. But it may say something about the other 493 stocks in the S&P 500, plus the other 4500 or so that are in the S-fund.
The market has come a long way since the lows, and it is very likely that the lows are in for now, although history does suggest we could see another correction in the second half of a midterm election year. But if you are getting bearish because we are still involved in a war with Iran, history is also on the bulls' side.
Even during World War II the Dow bottomed in April of 1942 and the war went on for another three years. I heard Tom Lee say there's a theory of, sell the set up, buy the bullet when a war is in the picture.
The recent breakout to new highs over 7000 on the S&P 500 is bullish by definition, but as we have seen a few times, sometimes a breakout is the last hurrah before another dip - right after they've lured in some of the last remaining bears into buying.
It may depend on how the oil market goes from here. The price of oil has been very sticky to the 100 area, but as we talked about, this could be the right shoulder of a head and shoulders pattern, which could mean an eventual breakdown once that shoulder is completed. That's pure technical analysis and not related to what's going on around the world.
The 10-year Treasury Yield was down slightly on Friday, but it is still showing strength as it broke above the recent descending resistance line, following the path of the price of oil.
The longer-term chart shows that rates have been fairly stable and it is currently where it was near the end of 2022, and several other times in the interim.
Semiconductors were up for an 18th straight trading day on Friday following Intel's earnings report.
Magnificent 7 earnings come in hot this week: On Wednesday after the closing bell we get reports from: Microsoft (MSFT), Alphabet (GOOGL), Meta Platforms (META), and Amazon (AMZN). And on Thursday Apple (AAPL) reports.
Expectations are high after some blow out earnings from Intel and the semiconductors as a whole. Is this the set up for disappointment or is the AI trade ready to take it to another level?
We have an FOMC meeting this week with a decision on interest rates being announced on Wednesday. There is virtually no one expecting a change in rates at this meeting.
We will get the PCE Prices inflation data on Thursday.
Additional TSP Fund Charts:
DWCPF (S-fund) made a new high early last week but has drifted lower since. The old breakout line has been holding as support so far and the bottom of Thursday's positive reversal day mostly filled in the open gap (blue.) Technically the gap could still be open until it gets to the closing price on April 16 of 2639. And of course the red boxes are gaps that are still wide open. The rising support line was broken late last week, but that angle of incline was not sustainable so that was to be expected at some point.
ACWX (I-fund) has been lagging the most as the higher price of oil really negatively impacted the international markets. The recent pullback low came conveniently on the 20-day average, which had been a very meaningful area of support on this chart before the war started. This chart also broke the ascending support line late last week.
BND (bonds / F-fund) has been doing a good job of holding at the old, elongated wedge formation. With yields looking like they want to go higher, this chart has some issues, but it may all depend on where oil goes from here as yields are following oil, and this chart moves in the opposite direction to yields.
Thanks so much for reading! See you 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
Updated monthly:
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.
