08/26/25
Stocks took a breather on Monday after Friday's Fed driven rally that took the indices at or near new highs. Whether it was a double top pullback on the S&P 500, a retracement of the large gain, or just a pause before breaking out to new highs, it's tough to say. There are plenty of decent arguments for each. Bonds and the dollar reversed Friday's moves, as did bitcoin during this pre-holiday reversal week.
(The most current commentary is always posted here: www.tsptalk.com/comments.php)
There's no rule that says stocks have to stop at resistance, but it is something we have to consider as support and resistance lines tend to work - until they don't. This long-term chart going back to an early 2018 peak and connecting a couple of other peaks might indicate that the S&P 500 is flirting with the top of a long-term ascending trading channel.
I don't want to sound too bearish since my outlook is more short-term in nature, but that above chart has to give you pause, and demands some consideration. Sure, a year, 5-years, or 10-years from now, this channel may still be intact, but that means the bottom of the channel is also potentially in play. Not this week or even perhaps this year, but some day.
For now, the action on Friday was so strong that it was only the 14th time ever that 90% of stocks were up, and 90% of the trading volume was on the upside. This has typically led to more long term gains. It was also the first time ever that 90% of stocks were up while the S&P was making a new high. That is also very bullish based on some similar readings just below that 90% level.
The shorter term action in the S&P 500 / C-fund shows that we may be experiencing a double top pullback. The prior peak was just at the end of July and the smaller (in time) the double top, typically the less severe any double top pullback tends to be. If it lasts a few more days it could be testing the bottom of this shorter term trading channel again already, which would be satisfied between 6375 and 6400 depending on when it declines. The 20-day average is also in that area near 6390.
A pullback to that level could be an obvious buying opportunity - or the ultimate trap since it is so obvious.
The 10-year Treasury Yield was up yesterday, but it was the dollar that was making headlines yesterday as it nearly recouped all of Friday's major sell off with that 0.80% gain. That means the 50-day EMA continues to hold, and the debate of whether the dollar is still trending lower, or creating a bottom also continues.
The market leading Dow Transportation Index was slammed on Monday after Friday's big rally. That means the bear flag is still intact, but that blue line continues to provide long term support. There are a couple of open gaps below that could be a lure that might test that support in the coming weeks.
Bitcoin rallied big on Friday but it gave up all of those gains over the weekend and yesterday. Bitcoin has become a leading indicator of sorts for the stock market, so keep an eye on this chart. Right now it looks like the pullback off the July peak is another bull flag, but...
... we saw a similar bull flag with a fake out to the upside earlier this year that led to a more severe decline of over 20%, and of course that led us into the February - April correction in the stock market. So, bull flags tend to be bullish, but this latest one may not be that simple.
Nvidia reports earnings after the closing bell tomorrow, and the inflation PCE Prices data will be coming out on Friday.
The DWCPF / S-fund pulled back to the prior August peak and held, although the momentum was on the downside when the market closed on Monday. Should that support break, there's a small open gap that could garner some attention. It's coming off the top of that trading channel so there is more room on the downside if there is going to be typical churning inside of the channel.
ACWX (I-fund) lagged yesterday thanks to that 0.80% rally in the dollar on Monday. But even with that 1% loss yesterday, the ACWX made its 2nd highest close ever.
BND (bonds / F-fund) is still hanging around its recent highs but hasn't made much of a move in either direction recently, despite all the talk of interest rate cuts. I'd say this chart looks more bullish, but that April peak has to hold to keep that distinction.
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.
Stocks took a breather on Monday after Friday's Fed driven rally that took the indices at or near new highs. Whether it was a double top pullback on the S&P 500, a retracement of the large gain, or just a pause before breaking out to new highs, it's tough to say. There are plenty of decent arguments for each. Bonds and the dollar reversed Friday's moves, as did bitcoin during this pre-holiday reversal week.
(The most current commentary is always posted here: www.tsptalk.com/comments.php)
| Daily TSP Funds Return
More returns |
There's no rule that says stocks have to stop at resistance, but it is something we have to consider as support and resistance lines tend to work - until they don't. This long-term chart going back to an early 2018 peak and connecting a couple of other peaks might indicate that the S&P 500 is flirting with the top of a long-term ascending trading channel.
I don't want to sound too bearish since my outlook is more short-term in nature, but that above chart has to give you pause, and demands some consideration. Sure, a year, 5-years, or 10-years from now, this channel may still be intact, but that means the bottom of the channel is also potentially in play. Not this week or even perhaps this year, but some day.
For now, the action on Friday was so strong that it was only the 14th time ever that 90% of stocks were up, and 90% of the trading volume was on the upside. This has typically led to more long term gains. It was also the first time ever that 90% of stocks were up while the S&P was making a new high. That is also very bullish based on some similar readings just below that 90% level.
The shorter term action in the S&P 500 / C-fund shows that we may be experiencing a double top pullback. The prior peak was just at the end of July and the smaller (in time) the double top, typically the less severe any double top pullback tends to be. If it lasts a few more days it could be testing the bottom of this shorter term trading channel again already, which would be satisfied between 6375 and 6400 depending on when it declines. The 20-day average is also in that area near 6390.
A pullback to that level could be an obvious buying opportunity - or the ultimate trap since it is so obvious.
The 10-year Treasury Yield was up yesterday, but it was the dollar that was making headlines yesterday as it nearly recouped all of Friday's major sell off with that 0.80% gain. That means the 50-day EMA continues to hold, and the debate of whether the dollar is still trending lower, or creating a bottom also continues.
The market leading Dow Transportation Index was slammed on Monday after Friday's big rally. That means the bear flag is still intact, but that blue line continues to provide long term support. There are a couple of open gaps below that could be a lure that might test that support in the coming weeks.
Bitcoin rallied big on Friday but it gave up all of those gains over the weekend and yesterday. Bitcoin has become a leading indicator of sorts for the stock market, so keep an eye on this chart. Right now it looks like the pullback off the July peak is another bull flag, but...
... we saw a similar bull flag with a fake out to the upside earlier this year that led to a more severe decline of over 20%, and of course that led us into the February - April correction in the stock market. So, bull flags tend to be bullish, but this latest one may not be that simple.
Nvidia reports earnings after the closing bell tomorrow, and the inflation PCE Prices data will be coming out on Friday.
The DWCPF / S-fund pulled back to the prior August peak and held, although the momentum was on the downside when the market closed on Monday. Should that support break, there's a small open gap that could garner some attention. It's coming off the top of that trading channel so there is more room on the downside if there is going to be typical churning inside of the channel.
ACWX (I-fund) lagged yesterday thanks to that 0.80% rally in the dollar on Monday. But even with that 1% loss yesterday, the ACWX made its 2nd highest close ever.
BND (bonds / F-fund) is still hanging around its recent highs but hasn't made much of a move in either direction recently, despite all the talk of interest rate cuts. I'd say this chart looks more bullish, but that April peak has to hold to keep that distinction.
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.
Last edited:
