10/01/25
The stock market had many reasons to sell off yesterday, but instead, after a weaker choppy morning, stocks rallied right into the closing bell and closed at the highs of the day. Not an end of quarter rebalancing, not profit taking into the volatility of October, nor concerns of an imminent government shutdown could stop the stock market from reaching up towards its all time highs, although the S-fund did lag and post a small loss.
If there were any concerns about the government shutting down yesterday, you couldn't find it on Wall Street. As we got closer to the closing bell and closer to the government shutting down before Tuesday night's deadline, the rally in stocks grew stronger.
Nvidia, the heaviest weighted stock in the S&P 500, rallied 2.6%, but even more telling is that the gain pushed it to a new all time high as it cut through the resistance. Is this the green light for yet another leg higher for the stock market or is the Magnificent 7 going to continue to outperform the broader, smaller market indices while investors remain hesitant to buy the more risky small caps?
The Russell 2000 (IWM) is near recent highs and it has been impressively holding above its 20-day EMA for months, with just one hiccup in early August.
Last week, and again yesterday, the IWM tested that average again, and so far it held. The prospects of lower interest rates tends to bring in more optimism for small caps, but as I heard someone on CNBC say yesterday, and he was introduced as "one of the top financial advisor's in this country", he would rather invest in large companies that are growing rather than companies that only look better now that the cost of capital is coming down.
The S&P 500 (C-fund) closed at its second highest closing price ever yesterday as the bounce off the bottom of its trading channel continued.
While that PMO indicator is now inline with its moving average, it looks to be trying to curl back up, but the fact that it has been trending lower since July is still a head scratchier. In hindsight the warning from that negative divergence was a false flag, but it's still waving. Should investors continue to ignore it or would that show signs of complacency?
As of this writing there has been no deal made in DC so I suspect the government could be shutdown by the time you read this on Wednesday. Right now both sides are trying to figure out how to come out of this with a small win, or at least not a complete conciliation. We know how this usually ends so I can feel my own complacency as I dismiss this as an issue for the stock market, but a stock market that is long overdue for a pullback may be looking for an excuse.
The DWCPF (S-fund) was down sharply early in the day, and while it did close with a small loss, it successfully tested that blue dashed support line again. It continues to trend higher but there is some weak resistance near 2500.
ACWX (I-fund) had a nice gain yesterday and it continues to trade well and the dollar seems to be stabilizing in that trading channel for now, despite a fake breakout, and a fake breakdown in the last couple of weeks.
BND (bonds / F-fund) was up early but backed off and closed with a small loss yesterday. It nearly filled the overhead gap that we talked about yesterday, while that large red gap technically remains half opened. Is it going to stay range bound for a while?
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.
The stock market had many reasons to sell off yesterday, but instead, after a weaker choppy morning, stocks rallied right into the closing bell and closed at the highs of the day. Not an end of quarter rebalancing, not profit taking into the volatility of October, nor concerns of an imminent government shutdown could stop the stock market from reaching up towards its all time highs, although the S-fund did lag and post a small loss.
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If there were any concerns about the government shutting down yesterday, you couldn't find it on Wall Street. As we got closer to the closing bell and closer to the government shutting down before Tuesday night's deadline, the rally in stocks grew stronger.
Nvidia, the heaviest weighted stock in the S&P 500, rallied 2.6%, but even more telling is that the gain pushed it to a new all time high as it cut through the resistance. Is this the green light for yet another leg higher for the stock market or is the Magnificent 7 going to continue to outperform the broader, smaller market indices while investors remain hesitant to buy the more risky small caps?
The Russell 2000 (IWM) is near recent highs and it has been impressively holding above its 20-day EMA for months, with just one hiccup in early August.
Last week, and again yesterday, the IWM tested that average again, and so far it held. The prospects of lower interest rates tends to bring in more optimism for small caps, but as I heard someone on CNBC say yesterday, and he was introduced as "one of the top financial advisor's in this country", he would rather invest in large companies that are growing rather than companies that only look better now that the cost of capital is coming down.
The S&P 500 (C-fund) closed at its second highest closing price ever yesterday as the bounce off the bottom of its trading channel continued.
While that PMO indicator is now inline with its moving average, it looks to be trying to curl back up, but the fact that it has been trending lower since July is still a head scratchier. In hindsight the warning from that negative divergence was a false flag, but it's still waving. Should investors continue to ignore it or would that show signs of complacency?
As of this writing there has been no deal made in DC so I suspect the government could be shutdown by the time you read this on Wednesday. Right now both sides are trying to figure out how to come out of this with a small win, or at least not a complete conciliation. We know how this usually ends so I can feel my own complacency as I dismiss this as an issue for the stock market, but a stock market that is long overdue for a pullback may be looking for an excuse.
The DWCPF (S-fund) was down sharply early in the day, and while it did close with a small loss, it successfully tested that blue dashed support line again. It continues to trend higher but there is some weak resistance near 2500.
ACWX (I-fund) had a nice gain yesterday and it continues to trade well and the dollar seems to be stabilizing in that trading channel for now, despite a fake breakout, and a fake breakdown in the last couple of weeks.
BND (bonds / F-fund) was up early but backed off and closed with a small loss yesterday. It nearly filled the overhead gap that we talked about yesterday, while that large red gap technically remains half opened. Is it going to stay range bound for a while?
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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