02/09/26
Stocks surged on Friday after a tumultuous week of trading. The gains pushed the S and I-funds into positive territory for the week / month, while the C-fund is just under flat. The gain in the S-fund was the kind that you typically only see after a dramatic decline, which had been the case after a sharp 10-day pullback, but is that it? Has the market bottomed again?
Despite continued pressure from the big tech sell off, the stock market indices continues to hang around the all time highs. Friday's rally was triggered by [fill in the blank]. Other than a big rally in bitcoin, there wasn't anything specific happening.
If it was bitcoin, perhaps there is reason to be optimistic. It has been an awful few months for cryptos, but after last week's retest of the breakout of that bull flag back in late 2024, we did see a positive reversal, and it it also managed to hold onto the 200-week average by the close.
Some say the rally on Friday was a short covering rally, aka, a short squeeze. That is created when traders are betting against stocks but they have to buy to cover those positions to avoid larger losses.
Click chart for source
"US hedge funds shorted US single stocks at the FASTEST pace last week since at least the 2020 CRISIS."
Whatever it was, it caused one of the largest daily point gains for the Dow, which broke out to new highs.
However, other charts are still lingering below their recent highs, and in the case of the S&P 500, it rallied right up to a key pivot point according to the bearish Wyckoff Distribution pattern. Yes, here it is again.
And below is the S&P 500 (C-fund) running right up to the line that the pattern suggests could be a level of resistance.
In Friday's commentary, which was after Thursday's close, I pointed out that we could be near that 2nd pullback off the highs (2nd yellow arrow above), and the pattern suggested it could lead to a rally up to that second red horizontal like. That's what we got, so failure here could be consequential, but a gap up that holds could bring the S&P closer to voiding this whole distribution situation. For some reason that pattern keeps coming back into the picture.
The January Jobs Report is scheduled to be released on Wednesday morning. We get retail sales on Tuesday, and the CPI report on Friday.
Additional TSP Fund Charts:
The DWCPF (S-fund) blasted through its descending resistance line, but finds itself right back at the neckline of the inverted head and shoulders pattern. This is quite the pivot point. Technically there is an open gap below between Thursday's close and Friday's low. This looks like it could be bullish, but failure here would be a red flag.
ACWX (I fund) had a big gain on Friday and it was enough to give the I-fund a new high closing price, even though the I-fund was only given a 1.96% gain on the day. We could see some fair value added to today's price. The chart remains intact with the trading channel still working after a brief break and a successful test of the 20-day moving average.
BND (bonds / F-fund) was flat but technically closed at a new high with that 1 cent gain. It is pushing against the upper resistance levels.
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
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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 surged on Friday after a tumultuous week of trading. The gains pushed the S and I-funds into positive territory for the week / month, while the C-fund is just under flat. The gain in the S-fund was the kind that you typically only see after a dramatic decline, which had been the case after a sharp 10-day pullback, but is that it? Has the market bottomed again?
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Despite continued pressure from the big tech sell off, the stock market indices continues to hang around the all time highs. Friday's rally was triggered by [fill in the blank]. Other than a big rally in bitcoin, there wasn't anything specific happening.
If it was bitcoin, perhaps there is reason to be optimistic. It has been an awful few months for cryptos, but after last week's retest of the breakout of that bull flag back in late 2024, we did see a positive reversal, and it it also managed to hold onto the 200-week average by the close.
Some say the rally on Friday was a short covering rally, aka, a short squeeze. That is created when traders are betting against stocks but they have to buy to cover those positions to avoid larger losses.
Click chart for source
"US hedge funds shorted US single stocks at the FASTEST pace last week since at least the 2020 CRISIS."
Whatever it was, it caused one of the largest daily point gains for the Dow, which broke out to new highs.
However, other charts are still lingering below their recent highs, and in the case of the S&P 500, it rallied right up to a key pivot point according to the bearish Wyckoff Distribution pattern. Yes, here it is again.
And below is the S&P 500 (C-fund) running right up to the line that the pattern suggests could be a level of resistance.
In Friday's commentary, which was after Thursday's close, I pointed out that we could be near that 2nd pullback off the highs (2nd yellow arrow above), and the pattern suggested it could lead to a rally up to that second red horizontal like. That's what we got, so failure here could be consequential, but a gap up that holds could bring the S&P closer to voiding this whole distribution situation. For some reason that pattern keeps coming back into the picture.
The January Jobs Report is scheduled to be released on Wednesday morning. We get retail sales on Tuesday, and the CPI report on Friday.
Additional TSP Fund Charts:
The DWCPF (S-fund) blasted through its descending resistance line, but finds itself right back at the neckline of the inverted head and shoulders pattern. This is quite the pivot point. Technically there is an open gap below between Thursday's close and Friday's low. This looks like it could be bullish, but failure here would be a red flag.
ACWX (I fund) had a big gain on Friday and it was enough to give the I-fund a new high closing price, even though the I-fund was only given a 1.96% gain on the day. We could see some fair value added to today's price. The chart remains intact with the trading channel still working after a brief break and a successful test of the 20-day moving average.
BND (bonds / F-fund) was flat but technically closed at a new high with that 1 cent gain. It is pushing against the upper resistance levels.
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 use additional methods and strategies to determine fund positions.
