07/21/25
Stocks ended the options expiration week with most of the indices, and TSP stock funds, pinned to the flat line on Friday. That could mean more volatility this week but the charts have been holding up very well, despite that negative reversal last Tuesday, and the seasonality calendar which turns more bearish this week. Bond yields and the dollar have been moving higher, and that could cause problems if it continues.
(The most current commentary is always posted here: www.tsptalk.com/comments.php)
The S&P 500 (C-fund) has been doing an excellent job of holding above the old resistance line, and the February highs, checking almost every box on the bullish technical check list. Fundamentally, there are questions as valuations are at historic highs. I also have some concerns when looking at the calendar, and the negative outside reversals we saw on the small caps' charts.
This chart just barely avoided an official negative outside reversal day last Tuesday. Technically, if the S&P 500 closed at 6239 or lower last Tuesday, it would have qualified, but instead it closed 5 points higher at 6244 to avoid it. Close enough - because the broader indices did qualify?
The PMO indicator has also rolled over below its moving average and that's a warning flag, although the two lines have been running neck and neck for weeks and it could easily pop above that average with a couple of positive days.
Despite the impressive consolidating near the recent highs on the daily chart, the weekly chart is still sitting near the top of its long-term trading channel, and challenging the overhead resistance. And with the S&P 500 valuations getting closer to all time highs as far as price to earnings and price to sales, it wouldn't be a stretch to expect this channel to start filling in in the near future. The alternative is a parabolic move that can make a ton of money in the short-term, but an eventual return to reality as history has shown repeatedly. It's the "when" that has humbled most market timers, because you never how long this can last. It always seems longer than we think.
Stocks don't always go down during the weaker period of the year for stocks, but they do face a seasonal headwind and according to this chart from Wayne Whaley, a three month period that begins on July 27 and ends on October 27, is the worst quarter of the year historically. Despite that, stocks were up (39 times) more often then down (36) since 1950, but of these quarters, it's the only one with a negative average return.
A more visual look shows that the three month returns from August to October being unimpressive verses any other three month period.
Source: https://x.com/SethCL/status/1945815147215265961?t=-LPE68czlTPJJcmLgHsJHQ
After an impressive rally in the dollar in July, the UUP chart is up against some important resistance. The I-fund is down slightly in July and if it stays there, it will be the first negative month for the I-fund this year. It may be able to avoid a negative July and regain its momentum if the UUP chart rolls back over here at resistance. On the other hand, if the UUP breaks out above that resistance, it might be time to avoid the I-fund.
It's another fairly slow week on the economic data calendar, but next week is the FOMC meeting, and the bulk of the Magnificent 7 earnings will be released, so this week may be the calm before next week's headline driven week.
The DWCPF / S-fund continues to stay above the old resistance line, which has turned into support. The negative outside reversal day is still looming )red arrow) and so far not showing the typical bearishness that tends to eventually follow those patterns. Since it wasn't an issue last week, if anything is going to happen it would be this week otherwise the statute of limitation is going to run out on that bearish development.
ACWX (I-fund) was down moderately, although they gave the I-fund a more favorable price in the TSP. That may affect today's final via a fair value adjustment. Support is just below Friday's close so it will be a good test this week, especially if the dollar continues to rally.
BND (bonds / F-fund) was up and it broke the recent descending resistance line after holding above the 50-day average during the entire pullback in July. Its next job is to get back above that red channel.
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 ended the options expiration week with most of the indices, and TSP stock funds, pinned to the flat line on Friday. That could mean more volatility this week but the charts have been holding up very well, despite that negative reversal last Tuesday, and the seasonality calendar which turns more bearish this week. Bond yields and the dollar have been moving higher, and that could cause problems if it continues.
(The most current commentary is always posted here: www.tsptalk.com/comments.php)
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The S&P 500 (C-fund) has been doing an excellent job of holding above the old resistance line, and the February highs, checking almost every box on the bullish technical check list. Fundamentally, there are questions as valuations are at historic highs. I also have some concerns when looking at the calendar, and the negative outside reversals we saw on the small caps' charts.
This chart just barely avoided an official negative outside reversal day last Tuesday. Technically, if the S&P 500 closed at 6239 or lower last Tuesday, it would have qualified, but instead it closed 5 points higher at 6244 to avoid it. Close enough - because the broader indices did qualify?
The PMO indicator has also rolled over below its moving average and that's a warning flag, although the two lines have been running neck and neck for weeks and it could easily pop above that average with a couple of positive days.
Despite the impressive consolidating near the recent highs on the daily chart, the weekly chart is still sitting near the top of its long-term trading channel, and challenging the overhead resistance. And with the S&P 500 valuations getting closer to all time highs as far as price to earnings and price to sales, it wouldn't be a stretch to expect this channel to start filling in in the near future. The alternative is a parabolic move that can make a ton of money in the short-term, but an eventual return to reality as history has shown repeatedly. It's the "when" that has humbled most market timers, because you never how long this can last. It always seems longer than we think.
Stocks don't always go down during the weaker period of the year for stocks, but they do face a seasonal headwind and according to this chart from Wayne Whaley, a three month period that begins on July 27 and ends on October 27, is the worst quarter of the year historically. Despite that, stocks were up (39 times) more often then down (36) since 1950, but of these quarters, it's the only one with a negative average return.
A more visual look shows that the three month returns from August to October being unimpressive verses any other three month period.
Source: https://x.com/SethCL/status/1945815147215265961?t=-LPE68czlTPJJcmLgHsJHQ
After an impressive rally in the dollar in July, the UUP chart is up against some important resistance. The I-fund is down slightly in July and if it stays there, it will be the first negative month for the I-fund this year. It may be able to avoid a negative July and regain its momentum if the UUP chart rolls back over here at resistance. On the other hand, if the UUP breaks out above that resistance, it might be time to avoid the I-fund.
It's another fairly slow week on the economic data calendar, but next week is the FOMC meeting, and the bulk of the Magnificent 7 earnings will be released, so this week may be the calm before next week's headline driven week.
The DWCPF / S-fund continues to stay above the old resistance line, which has turned into support. The negative outside reversal day is still looming )red arrow) and so far not showing the typical bearishness that tends to eventually follow those patterns. Since it wasn't an issue last week, if anything is going to happen it would be this week otherwise the statute of limitation is going to run out on that bearish development.
ACWX (I-fund) was down moderately, although they gave the I-fund a more favorable price in the TSP. That may affect today's final via a fair value adjustment. Support is just below Friday's close so it will be a good test this week, especially if the dollar continues to rally.
BND (bonds / F-fund) was up and it broke the recent descending resistance line after holding above the 50-day average during the entire pullback in July. Its next job is to get back above that red channel.
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.
