10/07/25
Stocks opened the new week mixed but mostly positive with the Dow down, but the S&P 500, Nasdaq, small caps all up despite more stocks down yesterday on the NYSE, than up. Yields were up, but that didn't put any pressure on, nor did a big gain in the dollar as the I-fund also had a healthy gain on Monday.
The trend traders know, when stocks are going up, you get in stocks. When stocks are going down, you sell. It's a great way to play the stock market as long, positive trends can make you a lot of money. But that approach does have a drawback in that, by the time the stocks charts break their positive trends, they have usually already come well off their highs.
Another approach is the anticipation or speculation approach where you try to time the turning points of the tops and bottoms. Very difficult, but when done correctly you look like a genius. The drawback is that if you are too early, you can miss out on big gains, or take a big loss if stocks are going down.
Here's a rough example. AppLovin (APP) has been one of the hottest stocks since the April lows. But yesterday there was news of a possible SEC probe into their data collection practices that sent the stock lower.
RevShark wrote about it in TheStreet.com yesterday if you want to read more, but the chart above wasn't giving much of a warning, so we might call that a black swan event. Investors were riding high and feeling no pain for a long time, but then yesterday it fell 14%, and that was actually well off the lows of the day.
Now what? Buy more? Sell it? Is the chart broken? Should investors have taken profits earlier?
This is a microcosm for the stock market because it may be how this bull market ends - some kind of black swan event, but that's tough, if not impossible, to predict.
On the other hand, you can get a stock like AMD. Not a small company but a trend trader may have sold this when it fell below the rising support line a month ago. Yes, they would have made good money, and you really have to look at it that way, and not that you missed this big move, but this one goes into the buy and holders corner as a win. Market timers may not have caught it unless they bought the breakout above resistance in Mid-September.
What's my point? I don't know - maybe that in a market like this we should be on the alert for just about any scenario to play out, whether it be a black swan, or a continued melt up. Just have a plan ready, and unless you do consider yourself a buy and holder, set some alerts on prices so you know when things start breaking their trend.
Is there a shift quietly starting? It's too early to say but let's take a look at some possible evidence.
This is the earliest of early indications, but yesterday yields moved up quite a bit and small caps didn't really blink. As I have said before, yields do not have to keep going down to keep the stock market moving higher. It's more about where it is and if it can stay in a comfortable range. But if the trend shift to positive, that is something different, and investors may look at things a little differently.
We may have a higher low forming but resistance is getting tested again.
Same for the dollar. A falling dollar helps prices go up because it takes more of the weak dollars to buy something that a stronger dollar bought in the past for fewer dollars. That's basically how inflation works.
Yesterday the dollar (UUP) was up and it again tested that 200-day average again. While most investors have been pricing in a dollar that is trending lower, it seems to be finding stability, and it may be on the verge of a breakout to the upside, which could put pressure on prices. That might be nice at the grocery store, but maybe not your stock portfolio.
This longer term chart shows the repeated tests of that 200-day average, and when they knock on that doors enough times, eventually that door may open.
I would associate a stronger dollar with falling prices in things like bitcoin, gold, silver, and other commodities, but they are all on fire. Both bitcoin and gold are at all time highs, while silver is flirting with its highs made decades ago.
What do we make of this? It is both speculation in the case of bitcoin, while others look at it as a safety play. However, these don;t usually go up when the dollar is moving up like it did yesterday, so there is something more going on here. We know governments and Central Banks are buying these, so what's up?
Another vote in the Senate fell short of approving a funding bill yesterday.
Stocks look great - no doubt. Buy and holders and trend traders are making big money. Just be careful out there and don't get too complacent because the market could get Applovin'd before you can blink. Hopefully we'll get a better warning than that one.
The S&P 500 (C-fund) didn't make a new intraday high yesterday, but it was a new closing high, and it trades near the top of its trading channel. Nothing is wrong here except for maybe being overly extended above some moving averages. If we see a move below 6650, it could get some trader's attention, and could be a reason to sell, but it hasn't happened yet, and the trend is a trader's friend - until it breaks.
The DWCPF (S-fund) popped up to a new high yesterday but as yields moved up as well yesterday, there was some selling taking the small caps off their best levels of the day. It's another strong chart with a strong trend. Just be ready in case that changes.
ACWX (I-fund) blasted through its rising resistance line and that could be a sign of it getting a little out of control, especially with indications that the dollar trying to strengthen. If the dollar rolls over again, then it would be tough to argue about the bullish case as much.
BND (bonds / F-fund) broke down from its support line that was acting as resistance, and perhaps it is finally heading down to fill that red open gap?
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 opened the new week mixed but mostly positive with the Dow down, but the S&P 500, Nasdaq, small caps all up despite more stocks down yesterday on the NYSE, than up. Yields were up, but that didn't put any pressure on, nor did a big gain in the dollar as the I-fund also had a healthy gain on Monday.
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The trend traders know, when stocks are going up, you get in stocks. When stocks are going down, you sell. It's a great way to play the stock market as long, positive trends can make you a lot of money. But that approach does have a drawback in that, by the time the stocks charts break their positive trends, they have usually already come well off their highs.
Another approach is the anticipation or speculation approach where you try to time the turning points of the tops and bottoms. Very difficult, but when done correctly you look like a genius. The drawback is that if you are too early, you can miss out on big gains, or take a big loss if stocks are going down.
Here's a rough example. AppLovin (APP) has been one of the hottest stocks since the April lows. But yesterday there was news of a possible SEC probe into their data collection practices that sent the stock lower.
RevShark wrote about it in TheStreet.com yesterday if you want to read more, but the chart above wasn't giving much of a warning, so we might call that a black swan event. Investors were riding high and feeling no pain for a long time, but then yesterday it fell 14%, and that was actually well off the lows of the day.
Now what? Buy more? Sell it? Is the chart broken? Should investors have taken profits earlier?
This is a microcosm for the stock market because it may be how this bull market ends - some kind of black swan event, but that's tough, if not impossible, to predict.
On the other hand, you can get a stock like AMD. Not a small company but a trend trader may have sold this when it fell below the rising support line a month ago. Yes, they would have made good money, and you really have to look at it that way, and not that you missed this big move, but this one goes into the buy and holders corner as a win. Market timers may not have caught it unless they bought the breakout above resistance in Mid-September.
What's my point? I don't know - maybe that in a market like this we should be on the alert for just about any scenario to play out, whether it be a black swan, or a continued melt up. Just have a plan ready, and unless you do consider yourself a buy and holder, set some alerts on prices so you know when things start breaking their trend.
Is there a shift quietly starting? It's too early to say but let's take a look at some possible evidence.
This is the earliest of early indications, but yesterday yields moved up quite a bit and small caps didn't really blink. As I have said before, yields do not have to keep going down to keep the stock market moving higher. It's more about where it is and if it can stay in a comfortable range. But if the trend shift to positive, that is something different, and investors may look at things a little differently.
We may have a higher low forming but resistance is getting tested again.
Same for the dollar. A falling dollar helps prices go up because it takes more of the weak dollars to buy something that a stronger dollar bought in the past for fewer dollars. That's basically how inflation works.
Yesterday the dollar (UUP) was up and it again tested that 200-day average again. While most investors have been pricing in a dollar that is trending lower, it seems to be finding stability, and it may be on the verge of a breakout to the upside, which could put pressure on prices. That might be nice at the grocery store, but maybe not your stock portfolio.
This longer term chart shows the repeated tests of that 200-day average, and when they knock on that doors enough times, eventually that door may open.
I would associate a stronger dollar with falling prices in things like bitcoin, gold, silver, and other commodities, but they are all on fire. Both bitcoin and gold are at all time highs, while silver is flirting with its highs made decades ago.
What do we make of this? It is both speculation in the case of bitcoin, while others look at it as a safety play. However, these don;t usually go up when the dollar is moving up like it did yesterday, so there is something more going on here. We know governments and Central Banks are buying these, so what's up?
Another vote in the Senate fell short of approving a funding bill yesterday.
Stocks look great - no doubt. Buy and holders and trend traders are making big money. Just be careful out there and don't get too complacent because the market could get Applovin'd before you can blink. Hopefully we'll get a better warning than that one.
The S&P 500 (C-fund) didn't make a new intraday high yesterday, but it was a new closing high, and it trades near the top of its trading channel. Nothing is wrong here except for maybe being overly extended above some moving averages. If we see a move below 6650, it could get some trader's attention, and could be a reason to sell, but it hasn't happened yet, and the trend is a trader's friend - until it breaks.
The DWCPF (S-fund) popped up to a new high yesterday but as yields moved up as well yesterday, there was some selling taking the small caps off their best levels of the day. It's another strong chart with a strong trend. Just be ready in case that changes.
ACWX (I-fund) blasted through its rising resistance line and that could be a sign of it getting a little out of control, especially with indications that the dollar trying to strengthen. If the dollar rolls over again, then it would be tough to argue about the bullish case as much.
BND (bonds / F-fund) broke down from its support line that was acting as resistance, and perhaps it is finally heading down to fill that red open gap?
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.
