01/05/26
Stocks opened the New Year with some choppy, mixed action on Friday with small caps and the 2025 leading I-fund doing very well, while the S&P was up modestly, and the Nasdaq was down slightly. The first few trading days of a New Year can be volatile, and add to that the weekend development with Maduro and Venezuela, and we have a catalysts that investors may not have prepared for. How will the markets react?
In case you were busy last week and enjoying a long holiday weekend, Happy New Year. Here were the final returns for 2025.
Not too shabby, but the range between the funds was quite wide so fund selection remains important. Whether that is to spread your accounts across various funds for more diversification, or to chase the hot funds, which clearly was the I-fund in 2025.
The ACWX (I-fund index) actually had the best return on Friday to start the year with a 1.49% gain, but the TSP only gave it a gain of 0.97% gain so there may be some positive fair value added to today's price. Can this fund continue to outpace the US funds? It will likely depend on the dollar, and while the chart looks as bullish as can be after the breakout from a long base, in the short-term this could always come back to test the breakout area, as is often the case after a long consolidation.
Compare that to the S&P 500 (C-fund) which had a failed breakout in December out of its bullish cup and handle formation, and it is now testing some key support. Friday's midday pullback filled that open gap before reversing higher, and that's a good development, but we continue to see the indicators showing an odd negative divergence.
That hasn't been a factor yet but the PMO indicator (red / black lines above) has been trending lower since July, despite the index hitting new highs all along and into late December. The MACD (moving average convergence / divergence) also made a lower high when the S&P made that all time high. These are historically warning signs, but so far it hasn't been an issue.
The other index charts are mixed as well. The Nasdaq 100, which are the largest tech stocks and heavily AI related, has been in a downtrend and actually created a negative outside reversal day on Friday. The 50-day average held so we'll just have to see if that negative reversal means more downside or not.
Meanwhile, other indices like the Dow Transportation Index and the small caps, created positive outside reversal days. Is that a sign that 2026 is finally going to be the year of the small caps over large caps? All of these charts are holding at key support levels at the moment, which bodes well for the stock market - as long as they hold.
We still have some issues with the jobs market as we see the unusual split in 2023 of jobs openings versus the S&P 500. The concern about AI was that it was going to take jobs away, and that may be the case, and clearly it has had an effect in recent years, but just like the printing press, the industrial revolution, mainframe computers and PC's, there's always something coming along to threaten a job, but we figure it out.
Robots may fix your car someday, but someone has to build, program, and maintain the robots. Wait, AI can program all of that! But where is AI going to run? Someone has to design, build, and run those data centers, So yeah, we'll figure it out.
The situation with Venezuela is new and I really don't know how the stock market is going to react. The people of Venezuela seem very happy with the ousting of Maduro, anti-Trumpers hate everything Trump does, and pro-Trumpers will support it. Geopolitically China, Russia, and Iran are condemning it. But what does it mean for financial markets?
The futures markets opened on Sunday evening without much fanfare. I was particularly interested to see how the oil market opened, and it opened up 11 cents. Hmm. Will the long down trend break on the news, or will oil hit more 52-week lows?
We will get the December jobs report on Friday of this week. We have the Supreme Court's decision on tariffs still looming, a new Fed Chair to be appointed, so it will be a interesting start to a new year.
Let's get to some of the administrative activities going on in this busy time of year.
We wrapped another year in the AutoTracker and other contests. You can find the winners posted here...
2025 AutoTracker Winners | December AutoTracker Winners |
MRJ won with an impressive 41% gain in 2025! Several others had returns in the +30%'s. You can follow their moves in the daily Last Look Report.
To remain active and eligible for prizes, you will need to log into the AutoTracker at least once every two months, or every 60 days, whether you make an allocation change or not. We have a lot of idle accounts that appear abandoned and we are trying to keep the list more clean.
The 2025 Guess the Dow Contest Winner was Fltiger! Congrats! They came within 313 points of the Dow's closing price of 48,063.
We're starting the 2026 version of Guess the Dow contest for interested forum members. It's free, and a $100 Amazon eGift Card goes to the winner, so why not?
DWCPF (S-fund) had a great day on Friday to start the year. It does remain in short-term downtrend but the 50-day average held, and the bullish inverted head and shoulders pattern is holding on nicely. The next few days could make or break this chart. 2540+ and < 2500 are the make or break areas here as support and resistance battle it out.
BND (bonds / F-fund) is also battling support and resistance as the 50-day average continues to hold, while the previous highs are also holding. This looks somewhat bullish but the 10-year Treasury Yield ($TNX) chart is looking like it wants to go higher - because of the bull flag, and because BND tends to move in the opposite direction, that would be bearish for the F-fund if yields broke out to the upside. The situation with Venezuela could shake up the bond market completely as it is often tied to the movements in the price of oil - although oil futures aren't moving much.
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 use additional methods and strategies to determine fund positions.
Stocks opened the New Year with some choppy, mixed action on Friday with small caps and the 2025 leading I-fund doing very well, while the S&P was up modestly, and the Nasdaq was down slightly. The first few trading days of a New Year can be volatile, and add to that the weekend development with Maduro and Venezuela, and we have a catalysts that investors may not have prepared for. How will the markets react?
| Daily TSP Funds Return
More returns |
In case you were busy last week and enjoying a long holiday weekend, Happy New Year. Here were the final returns for 2025.
Not too shabby, but the range between the funds was quite wide so fund selection remains important. Whether that is to spread your accounts across various funds for more diversification, or to chase the hot funds, which clearly was the I-fund in 2025.
The ACWX (I-fund index) actually had the best return on Friday to start the year with a 1.49% gain, but the TSP only gave it a gain of 0.97% gain so there may be some positive fair value added to today's price. Can this fund continue to outpace the US funds? It will likely depend on the dollar, and while the chart looks as bullish as can be after the breakout from a long base, in the short-term this could always come back to test the breakout area, as is often the case after a long consolidation.
Compare that to the S&P 500 (C-fund) which had a failed breakout in December out of its bullish cup and handle formation, and it is now testing some key support. Friday's midday pullback filled that open gap before reversing higher, and that's a good development, but we continue to see the indicators showing an odd negative divergence.
That hasn't been a factor yet but the PMO indicator (red / black lines above) has been trending lower since July, despite the index hitting new highs all along and into late December. The MACD (moving average convergence / divergence) also made a lower high when the S&P made that all time high. These are historically warning signs, but so far it hasn't been an issue.
The other index charts are mixed as well. The Nasdaq 100, which are the largest tech stocks and heavily AI related, has been in a downtrend and actually created a negative outside reversal day on Friday. The 50-day average held so we'll just have to see if that negative reversal means more downside or not.
Meanwhile, other indices like the Dow Transportation Index and the small caps, created positive outside reversal days. Is that a sign that 2026 is finally going to be the year of the small caps over large caps? All of these charts are holding at key support levels at the moment, which bodes well for the stock market - as long as they hold.
We still have some issues with the jobs market as we see the unusual split in 2023 of jobs openings versus the S&P 500. The concern about AI was that it was going to take jobs away, and that may be the case, and clearly it has had an effect in recent years, but just like the printing press, the industrial revolution, mainframe computers and PC's, there's always something coming along to threaten a job, but we figure it out.
Robots may fix your car someday, but someone has to build, program, and maintain the robots. Wait, AI can program all of that! But where is AI going to run? Someone has to design, build, and run those data centers, So yeah, we'll figure it out.
The situation with Venezuela is new and I really don't know how the stock market is going to react. The people of Venezuela seem very happy with the ousting of Maduro, anti-Trumpers hate everything Trump does, and pro-Trumpers will support it. Geopolitically China, Russia, and Iran are condemning it. But what does it mean for financial markets?
The futures markets opened on Sunday evening without much fanfare. I was particularly interested to see how the oil market opened, and it opened up 11 cents. Hmm. Will the long down trend break on the news, or will oil hit more 52-week lows?
We will get the December jobs report on Friday of this week. We have the Supreme Court's decision on tariffs still looming, a new Fed Chair to be appointed, so it will be a interesting start to a new year.
Let's get to some of the administrative activities going on in this busy time of year.
We wrapped another year in the AutoTracker and other contests. You can find the winners posted here...
2025 AutoTracker Winners | December AutoTracker Winners |
MRJ won with an impressive 41% gain in 2025! Several others had returns in the +30%'s. You can follow their moves in the daily Last Look Report.
To remain active and eligible for prizes, you will need to log into the AutoTracker at least once every two months, or every 60 days, whether you make an allocation change or not. We have a lot of idle accounts that appear abandoned and we are trying to keep the list more clean.
The 2025 Guess the Dow Contest Winner was Fltiger! Congrats! They came within 313 points of the Dow's closing price of 48,063.
We're starting the 2026 version of Guess the Dow contest for interested forum members. It's free, and a $100 Amazon eGift Card goes to the winner, so why not?
DWCPF (S-fund) had a great day on Friday to start the year. It does remain in short-term downtrend but the 50-day average held, and the bullish inverted head and shoulders pattern is holding on nicely. The next few days could make or break this chart. 2540+ and < 2500 are the make or break areas here as support and resistance battle it out.
BND (bonds / F-fund) is also battling support and resistance as the 50-day average continues to hold, while the previous highs are also holding. This looks somewhat bullish but the 10-year Treasury Yield ($TNX) chart is looking like it wants to go higher - because of the bull flag, and because BND tends to move in the opposite direction, that would be bearish for the F-fund if yields broke out to the upside. The situation with Venezuela could shake up the bond market completely as it is often tied to the movements in the price of oil - although oil futures aren't moving much.
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 use additional methods and strategies to determine fund positions.
