05/23/25
It was looking like a sell the rumor, buy the news reaction to the spending bill after it passed the House yesterday as stocks spent 90% of the day on Thursday in positive territory thanks to a pullback in Treasury Yields. But a late sell off took the S&P 500 and Dow into negative territory at the close. The small caps did post a gain thanks to those lower yields while the I-fund lagged as the dollar rebounded.
It's the same old story lately as the yields bounce around within the range we have been watching for months. The tax cuts in the spending bill had Wall Street excited about the potential economic growth this could bring, but also concerned about the possible inflation that may come with it, and that sent yields higher on Wednesday as we got closer to the House vote on the bill, but once it passed on Thursday morning, yields slipped back down and stocks moved higher.
That is until that final half hour of trading when the S&P 500 went from the intraday highs to a negative close.
After Wednesday's big rally, the 10-year Treasury Yield was falling all morning on Thursday but bottomed just after noon central time and stabilized, and that's when stocks started to notice and back off.
Here is the daily chart of the 10-year Treasury Yield which remains in a range, although we had to stretch that range a little this week. The stock market may get a lot crankier if we start seeing 4.7% again, but again it is not 4.6% or 4.7% that is actually the problem, its how quickly it went from 4.1% to to 4.6%. These changes in rates impact borrowing costs for companies, especially small companies who rely more on debt, and the stock market has to re-price some companies based on the changes, and that's why yesterday's decline in yields gave us some relief in this week's pullback.
The S&P 500 (C-fund) was flat so the pullback is still on but it also remains in the ascending channel, so no harm, no foul yet. An 1100-point rally in the S&P 500 is quite a run and it had gotten overbought in the short-term, but now we await to see how much of that may be given back during a pullback. The open gap below could be the target for this pullback, which is in the same neighborhood as the 50-day moving average, and I will remind you that this is occurring during a holiday reversal week.
Again, holiday reversals tend to resume the larger trend after the long weekend, and while historically the week following Memorial day weekend is bullish, in more recent years that hasn't been the case and the bullishness didn't show up until the first week in June. So, go with the long-term trend or the more recent tendencies? It's never easy.
The dollar has been trending lower for months and that is a key reason why the I-fund has been leading this year. That could certainly continue as we shouldn't really fight a trend, but there are some signs that it might reverse. Yes, that again, and not only is that analysis fighting the trend, but it also fights what the Trump administration is trying to do to the dollar. They not only want a lower 10-year Treasury Yield, but they also want a weaker dollar to help US exports. Look up the Mar-a-Lago Accord for more information on that. Whether it works or not, I don't know. I just look at the charts.
The dollar (UUP) moved higher yesterday, filling in Wednesday's gap that was opened. Again, the trend here is clearly down but after the bullish inverted head and shoulders pattern, I now see a bullish cup and handle formation, although these tend to be more bullish when near new highs and not near multi-month lows.
Again, the reason I keep bringing it up is because I am debating on how much or little I want the I-fund in my allocation going forward. The I-fund does better when the dollar is falling, and usually lags the US stocks when it is rallying.
Holiday Closing: From tsp.gov, "Some financial markets will be closed on Monday, May 26, in observance of Memorial Day. The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (May 26) will be processed Tuesday night (May 27) at Tuesday's closing share prices."
We'll be back on Tuesday with our next market commentary.
The DWCPF (S-fund) held firmly at the support from the 130 and 200 day averages, as well as the bottom of the ascending trading channel. Currently 2160, there's another double layer of support near 2100 should the channel break.
ACWX (I-fund) was down modestly yesterday after the negative outside reversal day on Wednesday. Some backing and filling may be needed here to keep the chart from getting too overbought with little support. The question is whether the dollar is trying to form a bottom, as you may be sick of hearing from me by now.
BND (bonds / F-fund) rallied after finding support at the 200-day EMA again. It remains in a downtrend after falling all month. Something will have to give here soon. The vote on the spending bill in the Senate may determine that.
Thanks so much for reading! Have a great holiday weekend, and please take some time to remember those who lost their lives fighting for this country.
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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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.
It was looking like a sell the rumor, buy the news reaction to the spending bill after it passed the House yesterday as stocks spent 90% of the day on Thursday in positive territory thanks to a pullback in Treasury Yields. But a late sell off took the S&P 500 and Dow into negative territory at the close. The small caps did post a gain thanks to those lower yields while the I-fund lagged as the dollar rebounded.
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It's the same old story lately as the yields bounce around within the range we have been watching for months. The tax cuts in the spending bill had Wall Street excited about the potential economic growth this could bring, but also concerned about the possible inflation that may come with it, and that sent yields higher on Wednesday as we got closer to the House vote on the bill, but once it passed on Thursday morning, yields slipped back down and stocks moved higher.
That is until that final half hour of trading when the S&P 500 went from the intraday highs to a negative close.
After Wednesday's big rally, the 10-year Treasury Yield was falling all morning on Thursday but bottomed just after noon central time and stabilized, and that's when stocks started to notice and back off.
Here is the daily chart of the 10-year Treasury Yield which remains in a range, although we had to stretch that range a little this week. The stock market may get a lot crankier if we start seeing 4.7% again, but again it is not 4.6% or 4.7% that is actually the problem, its how quickly it went from 4.1% to to 4.6%. These changes in rates impact borrowing costs for companies, especially small companies who rely more on debt, and the stock market has to re-price some companies based on the changes, and that's why yesterday's decline in yields gave us some relief in this week's pullback.
The S&P 500 (C-fund) was flat so the pullback is still on but it also remains in the ascending channel, so no harm, no foul yet. An 1100-point rally in the S&P 500 is quite a run and it had gotten overbought in the short-term, but now we await to see how much of that may be given back during a pullback. The open gap below could be the target for this pullback, which is in the same neighborhood as the 50-day moving average, and I will remind you that this is occurring during a holiday reversal week.
Again, holiday reversals tend to resume the larger trend after the long weekend, and while historically the week following Memorial day weekend is bullish, in more recent years that hasn't been the case and the bullishness didn't show up until the first week in June. So, go with the long-term trend or the more recent tendencies? It's never easy.
The dollar has been trending lower for months and that is a key reason why the I-fund has been leading this year. That could certainly continue as we shouldn't really fight a trend, but there are some signs that it might reverse. Yes, that again, and not only is that analysis fighting the trend, but it also fights what the Trump administration is trying to do to the dollar. They not only want a lower 10-year Treasury Yield, but they also want a weaker dollar to help US exports. Look up the Mar-a-Lago Accord for more information on that. Whether it works or not, I don't know. I just look at the charts.
The dollar (UUP) moved higher yesterday, filling in Wednesday's gap that was opened. Again, the trend here is clearly down but after the bullish inverted head and shoulders pattern, I now see a bullish cup and handle formation, although these tend to be more bullish when near new highs and not near multi-month lows.
Again, the reason I keep bringing it up is because I am debating on how much or little I want the I-fund in my allocation going forward. The I-fund does better when the dollar is falling, and usually lags the US stocks when it is rallying.
Holiday Closing: From tsp.gov, "Some financial markets will be closed on Monday, May 26, in observance of Memorial Day. The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (May 26) will be processed Tuesday night (May 27) at Tuesday's closing share prices."
We'll be back on Tuesday with our next market commentary.
The DWCPF (S-fund) held firmly at the support from the 130 and 200 day averages, as well as the bottom of the ascending trading channel. Currently 2160, there's another double layer of support near 2100 should the channel break.
ACWX (I-fund) was down modestly yesterday after the negative outside reversal day on Wednesday. Some backing and filling may be needed here to keep the chart from getting too overbought with little support. The question is whether the dollar is trying to form a bottom, as you may be sick of hearing from me by now.
BND (bonds / F-fund) rallied after finding support at the 200-day EMA again. It remains in a downtrend after falling all month. Something will have to give here soon. The vote on the spending bill in the Senate may determine that.
Thanks so much for reading! Have a great holiday weekend, and please take some time to remember those who lost their lives fighting for this country.
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.
