May 13, 2025
Stocks soared on the news of a trade deal with China. The charts continue to break through one layer of resistance after another, but when you get a 20% decline, there is always more resistance on the way up until new highs are made. The Nasdaq gained more than 4% on the day while the TSP's C, S, and I-funds gained 3.3%, 3.7%, and 1% respectively. The I-fund's 1% gain is a guestimate based on the return of ACWX, and the TSP will post their prices by the time many of you you read this. It lagged yesterday because the dollar was up 1.4%
The buy and holders had been hit hard this year but yesterday was a reminder of why it is tough to time the market, as the charts and indicators were all looking like it was time for a rest for stocks. That was certainly a bullish reaction and there are some who think this means blue skies ahead, but you don't have to look far to hear the skeptics saying that the trade situation is basically where it was before the tariff talk, so why the euphoria?
I guess my answer would be, this was less euphoria and more about relief. There has been some progress made on the reciprocity of tariffs and the Fentanyl situation, but after all was said and done, at least at this point in the global negotiations, the S&P 500 is only back to where it was in early March... and early January... and in December...and the day after the election... and in October.
But we can't forget that we have a couple of 90 day pauses on tariffs and the story may not be over. Progress was made but the question is whether the Trump administration wants to deal with this again after the pause, or if this sent the message and the concessions made were enough to keep things going.
The S&P 500 is priced for some very big earnings going forward, even after this pullback, and anytime you have a fully valued market, there is always room for a correction.
On the other hand, fully valued markets can become excessively overvalued markets, and while that sounds scary, there would be a lot of potential gains to get there, and then the cycle will start all over again: Fairly valued, undervalued, back to fairly valued, overvalued, and back again.
The current daily picture show a new open gap which starts at Friday's close, or 184 points lower than where it closed yesterday. Whether that gets filled anytime soon is unknown. While gaps tend to filled sooner than later, trend changing gaps on news or data can leave those gaps behind for a long time. It's tough to say which way this one will be, but there is certainly a more bullish story being written then there was a month ago.
Here's that rally in the dollar yesterday that is now hurting the I-fund, or at least leaving it behind the US TSP stock funds for a change. The 200-day average is being tested now so it's possible this relief rally off the lows in UUP is hitting a wall, and it could at least stall it. But fundamentally, I could see the dollar continuing higher in the coming months so I prefer the US funds.
The 10-Year Treasury Yield also popped higher on the thought that this trade deal will keep the US from falling into a recession. It's outside of the range it has been comfortable in, and while this makes multiple interest rates cuts by the Fed less likely, it's a good reaction to bullish news for the economy. By the way, the 2-Year Yield moved up to 4.0% yesterday so the Fed's current rate of 4.25% - 4.5% is getting closer to that target without them cutting.
yesterday I mentioned the wall of resistance that the Dow Transportation Index was facing coming into this week. Like I said above, once you get above one layer of resistance, there's usually more overhead until you make new highs, but the breakout is a bullish development for this economically sensitive index.
One of the Magnificent 7 stocks, Nvidia, rallied 5.4% yesterday but again, there's more work to be done for anything that has been in a downtrend. I don't see any reason why this wouldn't break out above that resistance, but it's interesting that it is lagging the rest of the market. I would say this has to break out if this new bull market (Nasdaq is 20% off the lows) is going to stick around for a while.
This is a very good market environment, but it has come a long way in a short time and stocks could be vulnerable to some short-term profit taking. Of course investors who are underinvested may keep the dips shallow.
Today we get the PPI report report. Will it derail the rally, or can it help keep yields stable with some inflation data?
DWCPF (S-fund) cleared a thick nest of resistance with Monday's gap up open. It did a great job of holding all day, so there was no attempt to fill the gap or take profits yet. This may indicate that investors are underinvested and felt the need, with the trade news, to do some catching up.
ACWX (I-fund) was up a solid 1% yesterday but because the dollar was also up big, the I-fund lagged the large crooked number gains in the US TSP funds. The question is, was the recent breakout in the dollar a warning sign for the I-fund?
The BND (F-fund) was down sharply as yields moved higher on the tariff news. This is starting to look a little like a bearish head and shoulders pattern. However, if yields are just stabilizing and not taking off higher on the stronger economic news, bonds would be fine.
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.
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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.
Stocks soared on the news of a trade deal with China. The charts continue to break through one layer of resistance after another, but when you get a 20% decline, there is always more resistance on the way up until new highs are made. The Nasdaq gained more than 4% on the day while the TSP's C, S, and I-funds gained 3.3%, 3.7%, and 1% respectively. The I-fund's 1% gain is a guestimate based on the return of ACWX, and the TSP will post their prices by the time many of you you read this. It lagged yesterday because the dollar was up 1.4%
| Daily TSP Funds Return
More returns |
The buy and holders had been hit hard this year but yesterday was a reminder of why it is tough to time the market, as the charts and indicators were all looking like it was time for a rest for stocks. That was certainly a bullish reaction and there are some who think this means blue skies ahead, but you don't have to look far to hear the skeptics saying that the trade situation is basically where it was before the tariff talk, so why the euphoria?
I guess my answer would be, this was less euphoria and more about relief. There has been some progress made on the reciprocity of tariffs and the Fentanyl situation, but after all was said and done, at least at this point in the global negotiations, the S&P 500 is only back to where it was in early March... and early January... and in December...and the day after the election... and in October.
But we can't forget that we have a couple of 90 day pauses on tariffs and the story may not be over. Progress was made but the question is whether the Trump administration wants to deal with this again after the pause, or if this sent the message and the concessions made were enough to keep things going.
The S&P 500 is priced for some very big earnings going forward, even after this pullback, and anytime you have a fully valued market, there is always room for a correction.
On the other hand, fully valued markets can become excessively overvalued markets, and while that sounds scary, there would be a lot of potential gains to get there, and then the cycle will start all over again: Fairly valued, undervalued, back to fairly valued, overvalued, and back again.
The current daily picture show a new open gap which starts at Friday's close, or 184 points lower than where it closed yesterday. Whether that gets filled anytime soon is unknown. While gaps tend to filled sooner than later, trend changing gaps on news or data can leave those gaps behind for a long time. It's tough to say which way this one will be, but there is certainly a more bullish story being written then there was a month ago.
Here's that rally in the dollar yesterday that is now hurting the I-fund, or at least leaving it behind the US TSP stock funds for a change. The 200-day average is being tested now so it's possible this relief rally off the lows in UUP is hitting a wall, and it could at least stall it. But fundamentally, I could see the dollar continuing higher in the coming months so I prefer the US funds.
The 10-Year Treasury Yield also popped higher on the thought that this trade deal will keep the US from falling into a recession. It's outside of the range it has been comfortable in, and while this makes multiple interest rates cuts by the Fed less likely, it's a good reaction to bullish news for the economy. By the way, the 2-Year Yield moved up to 4.0% yesterday so the Fed's current rate of 4.25% - 4.5% is getting closer to that target without them cutting.
yesterday I mentioned the wall of resistance that the Dow Transportation Index was facing coming into this week. Like I said above, once you get above one layer of resistance, there's usually more overhead until you make new highs, but the breakout is a bullish development for this economically sensitive index.
One of the Magnificent 7 stocks, Nvidia, rallied 5.4% yesterday but again, there's more work to be done for anything that has been in a downtrend. I don't see any reason why this wouldn't break out above that resistance, but it's interesting that it is lagging the rest of the market. I would say this has to break out if this new bull market (Nasdaq is 20% off the lows) is going to stick around for a while.
This is a very good market environment, but it has come a long way in a short time and stocks could be vulnerable to some short-term profit taking. Of course investors who are underinvested may keep the dips shallow.
Today we get the PPI report report. Will it derail the rally, or can it help keep yields stable with some inflation data?
DWCPF (S-fund) cleared a thick nest of resistance with Monday's gap up open. It did a great job of holding all day, so there was no attempt to fill the gap or take profits yet. This may indicate that investors are underinvested and felt the need, with the trade news, to do some catching up.
ACWX (I-fund) was up a solid 1% yesterday but because the dollar was also up big, the I-fund lagged the large crooked number gains in the US TSP funds. The question is, was the recent breakout in the dollar a warning sign for the I-fund?
The BND (F-fund) was down sharply as yields moved higher on the tariff news. This is starting to look a little like a bearish head and shoulders pattern. However, if yields are just stabilizing and not taking off higher on the stronger economic news, bonds would be fine.
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.
