03/12/26
Stocks were mixed yesterday, but mostly flat to slightly lower, despite a rally in the price of oil. Constant headlines regarding the Strait of Hormuz and the oil reserves has investors' head spinning with oil still dictating the stock market direction, although late yesterday there was some synchronicity. Yields popped and bonds dropped after the rally in oil, and CPI data that was inline with estimates.
The CPI inflation data came in mostly inline with estimates, not great, but not concerning, and yields were spiking before the CPI data so it seems to be a reaction to the higher oil prices.
The 10-year Treasury Yield rallied sharply and it closed above 4.2% for the first time in a month, and it is now just outside of the 4.1% - 4.2% range that has been the comfort zone. Those two spikes in the yield near January 20 and February 3 led to pullbacks in stocks, but the S&P turned back up when the yield fell back down.
The dollar looks like it is poised for a breakout to the upside with that bull flag developing. Will this keep the pressure on the I-fund, which has already been beaten down badly this month?
The price of oil stayed stubbornly strong on Wednesday despite a couple of stories about tapping oil reserves to relieve the supply that is stuck in the Middle East. And as we have seen over the last four trading days the S&P 500 has been zigging while the price of oil is zagging, but in the final hour of trading yesterday there was a reprieve from that trend as both oil and the S&P 500 closed strongly.
The S&P 500 (C-fund) was basically flat on a day that had some constant pressure on the stock market with oil rallying all day. It is flailing below the 86-day moving average, something that held it up for months before the breakdown this month. Technically we are still in a possible "V" bottom, but this chart must recapture the broken support soon, or the bears will pounce. It was actually surprising that the bears couldn't do much damage yesterday considering oil being so close to $90 / barrel and moving up. That may be a good sign.
One thing that has been interesting; I see several reasons to be concerned about the market, yet the S&P 500 is still only about 3% off its all time highs. The stock market doesn't usually give you five months to sell near a top. In other words, if stocks were going to rollover, they probably would have done so already.
Throwing in the war with Iran and skyrocketing oil prices couldn't even do it. That may be a good sign. I suppose the geopolitical picture could always get worse instead of better, but if there are no new surprises, the bulls may become emboldened again.
The concern for the rapidly rising prices of oil and gasoline is that consumers will be hurt in their pockets and their discretionary spending may be impacted negatively. So why is Starbucks making a new 52-week high? Take my house and my groceries - just don't touch my coffee?
I see several internal reasons to be concerned about this market, and that may be the warning sign that is telling us to get out. But investors are trying to hang on and keep the bull market alive. We could be one unexpected war time disaster away from a melt down in stocks, or we could be a surrender, peace agreement, or even a positive oil story away from a significant rally. I don't believe anyone knows the answer that that one.
Additional TSP Fund Charts:
DWCPF (S-fund) was down modestly yesterday but it is having trouble at the neckline of the head and shoulders pattern. The 200-day moving average may be tested again if that overhead resistance persists, but that must hold or the bears will come growling back with confidence because the downside target, if that support breaks, is near 2375.
ACWX (I-fund) was down slightly, which isn't bad considering the rally in the dollar yesterday. The trend broke down to start the month and that was a warning, but now it is churning above that moving average trying to digest the losses. The open gaps above are potential relief rally targets.
BND (bonds / F-fund) tanked after the price of oil rallied and the CPI didn't show much in the way of inflation going down, although it seems to have stabilized. That was enough for BND to break below support and back into that wedge-like formation.
And again, yields popped sending bond prices lower.
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
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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 were mixed yesterday, but mostly flat to slightly lower, despite a rally in the price of oil. Constant headlines regarding the Strait of Hormuz and the oil reserves has investors' head spinning with oil still dictating the stock market direction, although late yesterday there was some synchronicity. Yields popped and bonds dropped after the rally in oil, and CPI data that was inline with estimates.
| Daily TSP Funds Return More returns |
The CPI inflation data came in mostly inline with estimates, not great, but not concerning, and yields were spiking before the CPI data so it seems to be a reaction to the higher oil prices.
The 10-year Treasury Yield rallied sharply and it closed above 4.2% for the first time in a month, and it is now just outside of the 4.1% - 4.2% range that has been the comfort zone. Those two spikes in the yield near January 20 and February 3 led to pullbacks in stocks, but the S&P turned back up when the yield fell back down.
The dollar looks like it is poised for a breakout to the upside with that bull flag developing. Will this keep the pressure on the I-fund, which has already been beaten down badly this month?
The price of oil stayed stubbornly strong on Wednesday despite a couple of stories about tapping oil reserves to relieve the supply that is stuck in the Middle East. And as we have seen over the last four trading days the S&P 500 has been zigging while the price of oil is zagging, but in the final hour of trading yesterday there was a reprieve from that trend as both oil and the S&P 500 closed strongly.
The S&P 500 (C-fund) was basically flat on a day that had some constant pressure on the stock market with oil rallying all day. It is flailing below the 86-day moving average, something that held it up for months before the breakdown this month. Technically we are still in a possible "V" bottom, but this chart must recapture the broken support soon, or the bears will pounce. It was actually surprising that the bears couldn't do much damage yesterday considering oil being so close to $90 / barrel and moving up. That may be a good sign.
One thing that has been interesting; I see several reasons to be concerned about the market, yet the S&P 500 is still only about 3% off its all time highs. The stock market doesn't usually give you five months to sell near a top. In other words, if stocks were going to rollover, they probably would have done so already.
Throwing in the war with Iran and skyrocketing oil prices couldn't even do it. That may be a good sign. I suppose the geopolitical picture could always get worse instead of better, but if there are no new surprises, the bulls may become emboldened again.
The concern for the rapidly rising prices of oil and gasoline is that consumers will be hurt in their pockets and their discretionary spending may be impacted negatively. So why is Starbucks making a new 52-week high? Take my house and my groceries - just don't touch my coffee?
I see several internal reasons to be concerned about this market, and that may be the warning sign that is telling us to get out. But investors are trying to hang on and keep the bull market alive. We could be one unexpected war time disaster away from a melt down in stocks, or we could be a surrender, peace agreement, or even a positive oil story away from a significant rally. I don't believe anyone knows the answer that that one.
Additional TSP Fund Charts:
DWCPF (S-fund) was down modestly yesterday but it is having trouble at the neckline of the head and shoulders pattern. The 200-day moving average may be tested again if that overhead resistance persists, but that must hold or the bears will come growling back with confidence because the downside target, if that support breaks, is near 2375.
ACWX (I-fund) was down slightly, which isn't bad considering the rally in the dollar yesterday. The trend broke down to start the month and that was a warning, but now it is churning above that moving average trying to digest the losses. The open gaps above are potential relief rally targets.
BND (bonds / F-fund) tanked after the price of oil rallied and the CPI didn't show much in the way of inflation going down, although it seems to have stabilized. That was enough for BND to break below support and back into that wedge-like formation.
And again, yields popped sending bond prices lower.
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.
