02/23/26
Stocks rallied on Friday after the Supreme Court's ruling on tariffs. Stocks closed near the highs of the day, but the indices didn't make much headway after the initial spike higher following the morning headline. Small caps did not participate and bonds were relatively quiet given the shift in policy and the potential implications.
In Friday's commentary I emphatically suggested that the Supreme Court would not rule on the Tariff case until after Tuesday's State of the Union Address, and it didn't take long for them to prove me wrong. They obviously released their decision on Friday and the stock market reacted positively, but it wasn't the catalyst that some may have suspected. The betting markets told us that people expected it to get knocked down.
Market breadth (advancing vs. declining issues) was positive but not overwhelmingly so as the broader indices of the Russell 2000 and the 4500 stocks in the Dow Completion Index (our S-fund) were flat or slightly down on Friday. We also saw almost as many new 52 week lows as new highs on the Nasdaq, so I don't think anything was settled, as far as the stock market reaction to the tariff ruling.
Perhaps it was just the start of something while investors digest what it all means for the stock market, but the S&P 500 (C-fund) remains in its long trading range, looking for direction. The gains on Friday helped it recapture the blue trading channel, and the 50-day moving average, but it remains below the October peak so it is technically still consolidating in that three month range.
The market leading Dow Transportation Index rallied almost 2% and the daily chart looks great, but...
... the 2+ year chart shows there may be some longer-term resistance in the area, and it may have come too far too fast. The reason that matters is that most bull markets need the participation from the Transports, and any kind of pullback here could be contagious. That hasn't necessarily been as true in recent years, but the theory that the economically sensitive Transports still leads the rest of the market remains valid.
The 10-Year Treasury Yield was barely changed on Friday, and the dollar was down slightly. This dollar index chart is in a downtrend and stalling at the 50-day average.
I typically use the UUP chart and it is showing a slightly stronger position, but one reason I used it is because it tends to be updated before the $USD chart. However, the UUP dollar ETF pays dividends and that can effect the chart, so I may start using $USD when possible.
I don't want to get too deep into the tariff discussion because, like everything else related to Trump, most of us are more biased than practical, but what we do know is that tariffs may not be going away because of this ruling. They were just ruled illegal because they were implemented using the International Emergency Economic Powers Act, or IEEPA for short. Trump will try other avenues.
However you feel about it, the bottom line is, not a whole lot has changed. If anything it may help the stock market for an indirect reason. If the US government has to pay those tariffs back, they may have to crank up the dollar printing press, which is generally bullish.
Nvidia reports earnings after the closing bell on Wednesday, and with the AI trade deflating recently, this could be a market mover.
Additional TSP Fund Charts:
The Russell 2000 small caps index, and the DWCPF (S-fund) are both coming off another successful test of the 50-day average, but they are sitting below some possible resistance. To me it looks like a bullish pennant, which would assume a breakout to the upside, but that's enough resistance to warrant skepticism and concern for now.
The ACWX (I fund) did what it has been doing. That is, test the bottom of its trading channel and rally back. The descending trends in the dollar charts posted in the top section bode well for the I-fund, but that could change with any strength in the greenback this week. Again, if the government has to print money to pay back the tariffs collected, that would weaken the dollar.
BND (bonds / F-fund) was flat after a positive reversal on Friday. It basically filled in the open gap from the prior week, but a little more backing and filling here wouldn't be too surprising. Bonds don't tend to go straight up, or straight down.
Thanks so much for reading! We'll see 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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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 rallied on Friday after the Supreme Court's ruling on tariffs. Stocks closed near the highs of the day, but the indices didn't make much headway after the initial spike higher following the morning headline. Small caps did not participate and bonds were relatively quiet given the shift in policy and the potential implications.
| Daily TSP Funds Return
More returns |
In Friday's commentary I emphatically suggested that the Supreme Court would not rule on the Tariff case until after Tuesday's State of the Union Address, and it didn't take long for them to prove me wrong. They obviously released their decision on Friday and the stock market reacted positively, but it wasn't the catalyst that some may have suspected. The betting markets told us that people expected it to get knocked down.
Market breadth (advancing vs. declining issues) was positive but not overwhelmingly so as the broader indices of the Russell 2000 and the 4500 stocks in the Dow Completion Index (our S-fund) were flat or slightly down on Friday. We also saw almost as many new 52 week lows as new highs on the Nasdaq, so I don't think anything was settled, as far as the stock market reaction to the tariff ruling.
Perhaps it was just the start of something while investors digest what it all means for the stock market, but the S&P 500 (C-fund) remains in its long trading range, looking for direction. The gains on Friday helped it recapture the blue trading channel, and the 50-day moving average, but it remains below the October peak so it is technically still consolidating in that three month range.
The market leading Dow Transportation Index rallied almost 2% and the daily chart looks great, but...
... the 2+ year chart shows there may be some longer-term resistance in the area, and it may have come too far too fast. The reason that matters is that most bull markets need the participation from the Transports, and any kind of pullback here could be contagious. That hasn't necessarily been as true in recent years, but the theory that the economically sensitive Transports still leads the rest of the market remains valid.
The 10-Year Treasury Yield was barely changed on Friday, and the dollar was down slightly. This dollar index chart is in a downtrend and stalling at the 50-day average.
I typically use the UUP chart and it is showing a slightly stronger position, but one reason I used it is because it tends to be updated before the $USD chart. However, the UUP dollar ETF pays dividends and that can effect the chart, so I may start using $USD when possible.
I don't want to get too deep into the tariff discussion because, like everything else related to Trump, most of us are more biased than practical, but what we do know is that tariffs may not be going away because of this ruling. They were just ruled illegal because they were implemented using the International Emergency Economic Powers Act, or IEEPA for short. Trump will try other avenues.
However you feel about it, the bottom line is, not a whole lot has changed. If anything it may help the stock market for an indirect reason. If the US government has to pay those tariffs back, they may have to crank up the dollar printing press, which is generally bullish.
Nvidia reports earnings after the closing bell on Wednesday, and with the AI trade deflating recently, this could be a market mover.
Additional TSP Fund Charts:
The Russell 2000 small caps index, and the DWCPF (S-fund) are both coming off another successful test of the 50-day average, but they are sitting below some possible resistance. To me it looks like a bullish pennant, which would assume a breakout to the upside, but that's enough resistance to warrant skepticism and concern for now.
The ACWX (I fund) did what it has been doing. That is, test the bottom of its trading channel and rally back. The descending trends in the dollar charts posted in the top section bode well for the I-fund, but that could change with any strength in the greenback this week. Again, if the government has to print money to pay back the tariffs collected, that would weaken the dollar.
BND (bonds / F-fund) was flat after a positive reversal on Friday. It basically filled in the open gap from the prior week, but a little more backing and filling here wouldn't be too surprising. Bonds don't tend to go straight up, or straight down.
Thanks so much for reading! We'll see 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.
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