07/18/25
Stocks opened flat on Thursday but it didn't take long for the bulls to take charge after some stronger than expected Retail Sales data and better than expected Weekly Jobless Claims. The S&P 500 and Nasdaq both made new all-time closing highs. Small caps led again while the I-fund lagged with the dollar resuming its rally. Bonds were up slightly.
(The most current commentary is always posted here: www.tsptalk.com/comments.php)
The internal numbers were very solid with advancing stocks outpacing declining stocks by close to a 5 to 2 margin.
I know I can get maniacal about some of these things that I watch, but some indications seem to work better than others, and this one. I could be completely wrong, and it feels like it so far, but the two day rally over the last two days does not change this analysis. That is that the negative outside reversal day on Tuesday in the small caps (Russell 2000 and the S-fund charts) was a sign of something, and that something is likely negative. Maybe not devastating but they rarely come and go without some disturbance in the stock market.
IWM (Russell 2000) has almost recaptured the entire move of Tuesday's reversal, but that doesn't necessarily change the potential impact of one of those formations. I'll show the S&P 500 charts from the summer of 2023 and 2024 as an example.
There were three negative outside reversal days back then and two made higher highs before the index rolled over. I'll keep this on my radar for a week before dismissing it.
OK, with that out of the way, I can't deny that the chart action elsewhere has been fantastic with key support levels holding well. They are still extended, but strong bull market charts usually are -- until they correct. The S&P 500 (C-fund) has moved sideways, digesting the late June gains, and while it hasn't taken off, the support has held firmly so far.
I think we have a Trump Effect in the sentiment data. Below is the bulls to bears ratio. Take a look at how bullish investors were during the late 2023, into late October / early November of 2024. Then, after the election, half the country (my theory) got bearish because of how divided the population is on this presidency. Even a 1400+ point rally off the lows hasn't done much to get these numbers back to the 2 to 1 bulls to bears ratio we saw a year ago. This is actually a good thing, and why stocks may continue to climb a wall of worry as people in cash eventually give up and start buying.
You know who has been bullish? TSP Talk readers. We've seen ratios like the current one below (about 3 to 1 bulls to bears) for the past four weeks. It could be why we have more than 200 members in the AutoTracker are beating the return of the S&P 500 this year. That is something that many Wall Street money managers have struggled with - for the same reason; they remained too bearish after the tariff tantrum was over.
Netflix, an old "FANG" name but not part of the Magnificent 7, reported earnings after the bell and was down moderately despite beating estimates. Netflix isn't really a good reflection of the economy, although we can probably compare it to something like Starbuck's. When the economy goes south we could see people give up over-priced coffees and paying for streaming content before other more necessary purchases. For some people coffee is mandatory, but you can probably still get a cup of coffee for what, a buck or two at McDonald's?
The DWCPF / S-fund is looking fantastic, but why did it throw in that negative outside reversal day? Just to keep us (me) worried?
ACWX (I-fund) was up nicely but it lagged the US funds with the dollar (UUP) gaining 0.55% on the day. That 60.50 area has been solid support, and the blue resistance lines above are rising so this could keep climbing - but it also has the negative outside reversal day so, we'll find out soon enough if that matters.
BND (bonds / F-fund) was up a bit but remains in a falling wedge below some resistance, but it's also holding above the 50-day average. It's coiling up for something, and falling wedges do tend to break to the upside, so?
Thanks so much for reading! Have a great weekend!
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
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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 opened flat on Thursday but it didn't take long for the bulls to take charge after some stronger than expected Retail Sales data and better than expected Weekly Jobless Claims. The S&P 500 and Nasdaq both made new all-time closing highs. Small caps led again while the I-fund lagged with the dollar resuming its rally. Bonds were up slightly.
(The most current commentary is always posted here: www.tsptalk.com/comments.php)
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The internal numbers were very solid with advancing stocks outpacing declining stocks by close to a 5 to 2 margin.
I know I can get maniacal about some of these things that I watch, but some indications seem to work better than others, and this one. I could be completely wrong, and it feels like it so far, but the two day rally over the last two days does not change this analysis. That is that the negative outside reversal day on Tuesday in the small caps (Russell 2000 and the S-fund charts) was a sign of something, and that something is likely negative. Maybe not devastating but they rarely come and go without some disturbance in the stock market.
IWM (Russell 2000) has almost recaptured the entire move of Tuesday's reversal, but that doesn't necessarily change the potential impact of one of those formations. I'll show the S&P 500 charts from the summer of 2023 and 2024 as an example.
There were three negative outside reversal days back then and two made higher highs before the index rolled over. I'll keep this on my radar for a week before dismissing it.
OK, with that out of the way, I can't deny that the chart action elsewhere has been fantastic with key support levels holding well. They are still extended, but strong bull market charts usually are -- until they correct. The S&P 500 (C-fund) has moved sideways, digesting the late June gains, and while it hasn't taken off, the support has held firmly so far.
I think we have a Trump Effect in the sentiment data. Below is the bulls to bears ratio. Take a look at how bullish investors were during the late 2023, into late October / early November of 2024. Then, after the election, half the country (my theory) got bearish because of how divided the population is on this presidency. Even a 1400+ point rally off the lows hasn't done much to get these numbers back to the 2 to 1 bulls to bears ratio we saw a year ago. This is actually a good thing, and why stocks may continue to climb a wall of worry as people in cash eventually give up and start buying.
You know who has been bullish? TSP Talk readers. We've seen ratios like the current one below (about 3 to 1 bulls to bears) for the past four weeks. It could be why we have more than 200 members in the AutoTracker are beating the return of the S&P 500 this year. That is something that many Wall Street money managers have struggled with - for the same reason; they remained too bearish after the tariff tantrum was over.
Netflix, an old "FANG" name but not part of the Magnificent 7, reported earnings after the bell and was down moderately despite beating estimates. Netflix isn't really a good reflection of the economy, although we can probably compare it to something like Starbuck's. When the economy goes south we could see people give up over-priced coffees and paying for streaming content before other more necessary purchases. For some people coffee is mandatory, but you can probably still get a cup of coffee for what, a buck or two at McDonald's?
The DWCPF / S-fund is looking fantastic, but why did it throw in that negative outside reversal day? Just to keep us (me) worried?
ACWX (I-fund) was up nicely but it lagged the US funds with the dollar (UUP) gaining 0.55% on the day. That 60.50 area has been solid support, and the blue resistance lines above are rising so this could keep climbing - but it also has the negative outside reversal day so, we'll find out soon enough if that matters.
BND (bonds / F-fund) was up a bit but remains in a falling wedge below some resistance, but it's also holding above the 50-day average. It's coiling up for something, and falling wedges do tend to break to the upside, so?
Thanks so much for reading! Have a great weekend!
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.
Like what you're seeing on TSP Talk? Why not Tell a Friend about us? We'd really appreciate it, and they may too.
Thanks!
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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