12/30/25
Stocks couldn't get off the mat on Monday morning after the futures were down sharply overnight. This is supposed to be the week for stocks to shine but after two consecutive Santa Claus rally failures in 2023 and 2024, 2025's version has gotten off to a sluggish start. As is almost always the case, whenever everyone is expected one thing, the market likes dish out the other.
There's a lot going on and as bullish as I have been, especially for the Santa Claus rally, I do get concerned when everything is pointing to a rally, but stocks go down. I'm not getting overly bearish yet, but my antennae is picking up some concerns from a crosswinds of potential (yes, potential) turbulence.
I bored you with a bunch of silver talk yesterday, and I won't get too into that today, but silver did move over 80 yesterday, then flipped over and closed near 72. It's volatility that could liquidate those who are too leveraged, either on the long or short side, and there are some banks that are being impacted, although it's mostly in the rumor mill right now. If interested, you can read more about that here.
It's a similar situation that bitcoin has had on the stock market since there can be so much wealth generated, or taken away in fast moving markets, and that can spill over into the equities markets. Bitcoin peaked in October and you can see below that the S&P 500 still hasn't gotten very far from its October highs.
The S&P 500 (C-fund) pulled back from Friday's all time high, after Friday turned into a modest negative reversal day. It held at 6900 on the close, which was important as there was some support there, but for now this is looking like a failed breakout with a potential target of filling that open gap by 6830. I love the inverted head and shoulders pattern, but there's also a possible rising wedge formed, which can be bearish, so this has some mixed signals during a week where the bulls are supposed to have an advantage.
When the S&P 500 is compared to the dollar, we get this next chart - the chart we are used to viewing. Since the dollar has been weakening over the year, it helps prices move up. That's not necessarily a great thing, but it's why stocks are better than sticking cash in a mattress. However, when the S&P 500 is priced in gold...
... the chart looks a lot different. Since gold tends to move with inflation - not losing value like cash, the S&P 500 chart isn't doing as well.
That's probably oversimplifying the situation, but it is a microcosm of why people buy gold. Gold has outperformed the S&P 500 for decades, and that's surprising to most people. By the way, I don't own any gold, although I trade it once in a while, but I do have some silver.
Bond yields were lower yesterday, but that didn't help the small caps, and that's four days in a row where yields cooperated, but small caps couldn't rally.
The dollar continues to find support at that 200-day average, so that helped take a little steam out of the I-fund despite some gains in the European markets yesterday.
The two market leaders that I like to check on are the Transports and the small caps of the Russell 2000. The Transportation Index has been as hot as can be, that is until 2 or 3 weeks ago when it peaked, and now it may be creating a flat top formation. Those are not good signs for the short term, but I would say this could develop into a bull flag if it can hang on.
The Russell 2000 ETF, IWM, has now failed for a second time, trying to get above the October highs. And this is supposed to be the time of year that they do well, although many years ago January was the time for small caps but that tendency had crept into December a while back.
From tsp.gov: Holiday Closing - Some financial markets will be closed on Thursday, January 1, in observance of New Year's Day. The Thrift Savings Plan will also be closed. Transactions that would have been processed Thursday night (January 1) will be processed Friday night (January 2) at Friday's closing share prices.
DWCPF (S-fund) is still in a pullback and I was a little concerned that the bottom of the gap did not hold. That would have been a convenient spot for the bull flag to hold, but now it's just another failed breakout. Maybe we need to see more backing and filling in the right shoulder?
ACWX (I-fund) had a moderate pullback and overall it looks fine but it has some room to pull back to test its breakout line, which is typical inverted head and shoulders action. Breakout, pullback to test the old resistance, then it needs to hold at that support. So, a move to the 66.70 area would be textbook pullback action.
BND (bonds / F-fund) had a nice day with yields falling. It did fill that open gap and may be ready to retest the old highs. Triple tops tend to be less trouble than double tops, but this has been very choppy lately so let's not get ahead of ourselves by looking for new highs.
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 couldn't get off the mat on Monday morning after the futures were down sharply overnight. This is supposed to be the week for stocks to shine but after two consecutive Santa Claus rally failures in 2023 and 2024, 2025's version has gotten off to a sluggish start. As is almost always the case, whenever everyone is expected one thing, the market likes dish out the other.
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There's a lot going on and as bullish as I have been, especially for the Santa Claus rally, I do get concerned when everything is pointing to a rally, but stocks go down. I'm not getting overly bearish yet, but my antennae is picking up some concerns from a crosswinds of potential (yes, potential) turbulence.
I bored you with a bunch of silver talk yesterday, and I won't get too into that today, but silver did move over 80 yesterday, then flipped over and closed near 72. It's volatility that could liquidate those who are too leveraged, either on the long or short side, and there are some banks that are being impacted, although it's mostly in the rumor mill right now. If interested, you can read more about that here.
It's a similar situation that bitcoin has had on the stock market since there can be so much wealth generated, or taken away in fast moving markets, and that can spill over into the equities markets. Bitcoin peaked in October and you can see below that the S&P 500 still hasn't gotten very far from its October highs.
The S&P 500 (C-fund) pulled back from Friday's all time high, after Friday turned into a modest negative reversal day. It held at 6900 on the close, which was important as there was some support there, but for now this is looking like a failed breakout with a potential target of filling that open gap by 6830. I love the inverted head and shoulders pattern, but there's also a possible rising wedge formed, which can be bearish, so this has some mixed signals during a week where the bulls are supposed to have an advantage.
When the S&P 500 is compared to the dollar, we get this next chart - the chart we are used to viewing. Since the dollar has been weakening over the year, it helps prices move up. That's not necessarily a great thing, but it's why stocks are better than sticking cash in a mattress. However, when the S&P 500 is priced in gold...
... the chart looks a lot different. Since gold tends to move with inflation - not losing value like cash, the S&P 500 chart isn't doing as well.
That's probably oversimplifying the situation, but it is a microcosm of why people buy gold. Gold has outperformed the S&P 500 for decades, and that's surprising to most people. By the way, I don't own any gold, although I trade it once in a while, but I do have some silver.
Bond yields were lower yesterday, but that didn't help the small caps, and that's four days in a row where yields cooperated, but small caps couldn't rally.
The dollar continues to find support at that 200-day average, so that helped take a little steam out of the I-fund despite some gains in the European markets yesterday.
The two market leaders that I like to check on are the Transports and the small caps of the Russell 2000. The Transportation Index has been as hot as can be, that is until 2 or 3 weeks ago when it peaked, and now it may be creating a flat top formation. Those are not good signs for the short term, but I would say this could develop into a bull flag if it can hang on.
The Russell 2000 ETF, IWM, has now failed for a second time, trying to get above the October highs. And this is supposed to be the time of year that they do well, although many years ago January was the time for small caps but that tendency had crept into December a while back.
From tsp.gov: Holiday Closing - Some financial markets will be closed on Thursday, January 1, in observance of New Year's Day. The Thrift Savings Plan will also be closed. Transactions that would have been processed Thursday night (January 1) will be processed Friday night (January 2) at Friday's closing share prices.
DWCPF (S-fund) is still in a pullback and I was a little concerned that the bottom of the gap did not hold. That would have been a convenient spot for the bull flag to hold, but now it's just another failed breakout. Maybe we need to see more backing and filling in the right shoulder?
ACWX (I-fund) had a moderate pullback and overall it looks fine but it has some room to pull back to test its breakout line, which is typical inverted head and shoulders action. Breakout, pullback to test the old resistance, then it needs to hold at that support. So, a move to the 66.70 area would be textbook pullback action.
BND (bonds / F-fund) had a nice day with yields falling. It did fill that open gap and may be ready to retest the old highs. Triple tops tend to be less trouble than double tops, but this has been very choppy lately so let's not get ahead of ourselves by looking for new highs.
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.
