07/14/25
Friday's losses tipped the major indices into negative territory for the week. There is still bullish momentum but this latest chapter in the tariff talk did slow it down, and now the seasonality calendar flips to a more bearish bias in the latter half of July. The bears have an opportunity, but is the bullish momentum too forceful to slow down? Bonds were down hard as yields and the dollar rallied again.
(The most current commentary is always posted here: www.tsptalk.com/comments.php)
The next wave of tariff talk started last week after the July 9 deadline was moved into August, and we heard some announcements of higher tariffs being established. Like in April, the higher tariffs sent yields higher on Friday and yields have actually been rising all month.
The 10-year Treasury Yield is back in the trading channel after falling back below it for a couple of days, but it found support at the 200-day average and rebounded. Despite the higher yields, the small caps have come alive in July with the S-fund leading the TSP funds this month, but on Friday the small caps were the most negatively impacted by those higher yields.
The dollar has also been climbing this month and the UUP is now testing the top of a trading channel that could make or break the chart, and it will also be a significant catalyst for the I-fund. A strong dollar will put some pressure on the I-fund.
The S&P 500 (C-fund) was down modestly on Friday and for the week, and we have some rising support coming up that could be a meaningful test for the index during a week that loses the bullish seasonal advantage for stocks. With no major pullbacks since the April low, save for some sideways consolidation, the index has become somewhat overbought.
The bullish portion of the July seasonality calendar will turn more bearish by the end of the week. Seasonality is not typically a primary indicator, and stock market momentum can be just as important, so we could have a little battle this week.
It certainly impacted the action last year as the S&P 500 peaked and rolled over on cue after July 16.
Stocks quickly recovered after that decline, and the buy and holders were rewarded for holding on, but a savvy market timer could have beaten the S&P 500 return handily during that three week 10% correction.
Back to the current overbought condition, I tend to use the following charts when I think stocks may be getting extended, but I don't have a very good reason why they should pull back, other than some possible contested tariff negotiations. We can see that both the daily chart and its 50-day moving average, and the weekly chart and its 20-week average, frequently converge and remind us that overbought markets do tend to correct. They can converge by the index moving lower or going flat while the averages rise. Sometimes it can take a very long time for that to happen, and that is how investors can miss rallies that continue to perform despite overbought conditions.
It's tough to say which is the correct way to approach it, but there are good arguments on both sides. A buy and holder will never miss a rally, but they will take the full brunt of pullbacks, corrections, and bear markets. A market timer could sell too early, and as we see in some cases in the charts above, the rallies can go on for many months before testing those averages.
This week we will get the CPI (Consumer Prices) data on Tuesday, and the PPI (Producer Prices) on Wednesday. With yields moving up recently on the tariff talk, these could nudge inflation expectation one way or the other this week.
DWCPF / S-fund did flip over after Thursday's spinning top formation, but it remains above that old resistance line that it is looking to hold as support. The red gap within the channel is still open and it happens to be where the 50-day EMA and the bottom of the channel meet, so it would certainly be a potential target for any meaningful pullback.
The ACWX (I-fund) finally succumbed to the recent strength in the dollar on Friday, and it closed back below that trading channel, making it vulnerable to more downside if it cannot recapture that support quickly.
BND (bonds / F-fund) was slammed on Friday and that pushed it back down down into the red channel and it also filled the open gap. It could hold here, but it is certainly more vulnerable below that old resistance line, and something may have to change on the tariff front to get bonds back in favor. The CPI and PPI reports could do that as well.
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.
Friday's losses tipped the major indices into negative territory for the week. There is still bullish momentum but this latest chapter in the tariff talk did slow it down, and now the seasonality calendar flips to a more bearish bias in the latter half of July. The bears have an opportunity, but is the bullish momentum too forceful to slow down? Bonds were down hard as yields and the dollar rallied again.
(The most current commentary is always posted here: www.tsptalk.com/comments.php)
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The next wave of tariff talk started last week after the July 9 deadline was moved into August, and we heard some announcements of higher tariffs being established. Like in April, the higher tariffs sent yields higher on Friday and yields have actually been rising all month.
The 10-year Treasury Yield is back in the trading channel after falling back below it for a couple of days, but it found support at the 200-day average and rebounded. Despite the higher yields, the small caps have come alive in July with the S-fund leading the TSP funds this month, but on Friday the small caps were the most negatively impacted by those higher yields.
The dollar has also been climbing this month and the UUP is now testing the top of a trading channel that could make or break the chart, and it will also be a significant catalyst for the I-fund. A strong dollar will put some pressure on the I-fund.
The S&P 500 (C-fund) was down modestly on Friday and for the week, and we have some rising support coming up that could be a meaningful test for the index during a week that loses the bullish seasonal advantage for stocks. With no major pullbacks since the April low, save for some sideways consolidation, the index has become somewhat overbought.
The bullish portion of the July seasonality calendar will turn more bearish by the end of the week. Seasonality is not typically a primary indicator, and stock market momentum can be just as important, so we could have a little battle this week.
It certainly impacted the action last year as the S&P 500 peaked and rolled over on cue after July 16.
Stocks quickly recovered after that decline, and the buy and holders were rewarded for holding on, but a savvy market timer could have beaten the S&P 500 return handily during that three week 10% correction.
Back to the current overbought condition, I tend to use the following charts when I think stocks may be getting extended, but I don't have a very good reason why they should pull back, other than some possible contested tariff negotiations. We can see that both the daily chart and its 50-day moving average, and the weekly chart and its 20-week average, frequently converge and remind us that overbought markets do tend to correct. They can converge by the index moving lower or going flat while the averages rise. Sometimes it can take a very long time for that to happen, and that is how investors can miss rallies that continue to perform despite overbought conditions.
It's tough to say which is the correct way to approach it, but there are good arguments on both sides. A buy and holder will never miss a rally, but they will take the full brunt of pullbacks, corrections, and bear markets. A market timer could sell too early, and as we see in some cases in the charts above, the rallies can go on for many months before testing those averages.
This week we will get the CPI (Consumer Prices) data on Tuesday, and the PPI (Producer Prices) on Wednesday. With yields moving up recently on the tariff talk, these could nudge inflation expectation one way or the other this week.
DWCPF / S-fund did flip over after Thursday's spinning top formation, but it remains above that old resistance line that it is looking to hold as support. The red gap within the channel is still open and it happens to be where the 50-day EMA and the bottom of the channel meet, so it would certainly be a potential target for any meaningful pullback.
The ACWX (I-fund) finally succumbed to the recent strength in the dollar on Friday, and it closed back below that trading channel, making it vulnerable to more downside if it cannot recapture that support quickly.
BND (bonds / F-fund) was slammed on Friday and that pushed it back down down into the red channel and it also filled the open gap. It could hold here, but it is certainly more vulnerable below that old resistance line, and something may have to change on the tariff front to get bonds back in favor. The CPI and PPI reports could do that as well.
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.
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