10/23/25
Stocks opened lower on Wednesday and struggled most of the day so the pullback is still in progress, but we did see the indices close off the lows and the charts are still holding up well at key levels. Earnings are coming in and shaking things up, and seasonality is still on the bears' side until the end of the week. Next week the breeze will be more at the backs of the bulls, who will have to prove themselves again as the bears are waiting for any cracks in the charts to pounce.
I didn't believe that Netflix mattered all that much, but a 10% decline in stock that was an original FANG company, will get investors' attention. It's not part of the Magnificent 7 stocks, so it has been taken down a notch on the importance scale. It's actually a good indicator of just how much time people people waste in front of their TV's, but their disappointing earnings did seem to have extenuating circumstances.
Tesla, one of the Magnificent 7 companies, reported yesterday after the bell and they were down about 3% in after hours trading, so the market will have to deal with that today. IBM was down over 6% after earnings, and that will weigh on the Dow today. Interestingly, while that was playing out, the S&P and Nasdaq futures were up slightly last night.
The top companies of the Mag 7 all have decent charts with three just below all time highs, and only Nvidia has pulled back to its support line. That doesn't tell us what they are going to do after reporting earnings, but the set ups look pretty good.
Clearly something is different recently, although we actually had a similar market move in late July / Early August that we can compare this to, and that turned out to be just another buying opportunity. We've had two or three dips in between down to that 30-day moving average, and and again, they were all buying opportunities (see chart below.)
When those declines are happening it is not a great feeling for the bulls, and the bears are thinking that this one is the real decline that they've been looking for. When stocks bounce back and frustrate the bears, the bulls can't remember what all the fuss was about.
Well, here we are again, and again the bulls have that not so great feeling, and the bears are calling for the big one.
One day the bears will be right, but looking at the charts, the recent decline has been technically sound in that the key moving averages are holding, but it has been a little more messy in that it has been very choppy and not straight back up as the bulls have come to expect.
That goes with the seasonality, and as we pointed out several times, this week is historically volatile and is often the last hurrah from the bears before the end of year rally starts to warm up.
It's tough to say end of year rally with a straight face because stocks have been rallying since April with only a few hiccups, and the last week or two has been one of those hiccups.
The S&P 500 (C-fund) chart still looks OK, but if we see the chart break below that 50-day average for more than a couple of days, all bets are off. But for now, it looks too early to make that call. Selling at the top is a great feeling, but I tried that a couple of times already since the new highs in late June, and that didn't work out. That said, my confidence level in a rally makes me as nervous as any other contrarian indicator. At least I know that.
I'm nervously optimistic.
The 10-year Treasury Yield was down again and it getting comfortable below 4%. The stock market isn't behaving well with it below 4%, so the bulls want to see this stabilize soon. It can stay below 4%, but stabilizing there would help.
The dollar (UUP) was up, hit that 200-day simple moving average (red), and reversed down again. Technical analysis seems silly to some people, but it works too often to dismiss it. Something will have to give here - that average, or the blue trading channel.
It was reported late yesterday that President Trump believes there will be a deal with China on rare earths, soybeans, and nuclear issues, and perhaps that will set a more positive tone if the origins of this recent decline, the Chinese tariff negotiations, are behind us. With those poor earnings last night but the future slightly positive, this could be helping.
DWCPF Index (S-Fund) did it again - a 4th test of the 50-day moving average, but it successfully held again. I don't like all of these tests because eventually they don't hold. But if that is the case, the 12 tests at a breakout to new highs would mean that resistance is weakening as well. It did close below the bottom of the red trading channel, so it needs to recapture that area first before we talk about a breakout to new highs.
ACWX (I-fund) was fairly flat yesterday, holding up better than the US stocks after a modest dip in the dollar.
BND (bonds / F-fund) closed yet again above the old resistance line after a flat day for bonds.
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 lower on Wednesday and struggled most of the day so the pullback is still in progress, but we did see the indices close off the lows and the charts are still holding up well at key levels. Earnings are coming in and shaking things up, and seasonality is still on the bears' side until the end of the week. Next week the breeze will be more at the backs of the bulls, who will have to prove themselves again as the bears are waiting for any cracks in the charts to pounce.
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I didn't believe that Netflix mattered all that much, but a 10% decline in stock that was an original FANG company, will get investors' attention. It's not part of the Magnificent 7 stocks, so it has been taken down a notch on the importance scale. It's actually a good indicator of just how much time people people waste in front of their TV's, but their disappointing earnings did seem to have extenuating circumstances.
Tesla, one of the Magnificent 7 companies, reported yesterday after the bell and they were down about 3% in after hours trading, so the market will have to deal with that today. IBM was down over 6% after earnings, and that will weigh on the Dow today. Interestingly, while that was playing out, the S&P and Nasdaq futures were up slightly last night.
The top companies of the Mag 7 all have decent charts with three just below all time highs, and only Nvidia has pulled back to its support line. That doesn't tell us what they are going to do after reporting earnings, but the set ups look pretty good.
Clearly something is different recently, although we actually had a similar market move in late July / Early August that we can compare this to, and that turned out to be just another buying opportunity. We've had two or three dips in between down to that 30-day moving average, and and again, they were all buying opportunities (see chart below.)
When those declines are happening it is not a great feeling for the bulls, and the bears are thinking that this one is the real decline that they've been looking for. When stocks bounce back and frustrate the bears, the bulls can't remember what all the fuss was about.
Well, here we are again, and again the bulls have that not so great feeling, and the bears are calling for the big one.
One day the bears will be right, but looking at the charts, the recent decline has been technically sound in that the key moving averages are holding, but it has been a little more messy in that it has been very choppy and not straight back up as the bulls have come to expect.
That goes with the seasonality, and as we pointed out several times, this week is historically volatile and is often the last hurrah from the bears before the end of year rally starts to warm up.
It's tough to say end of year rally with a straight face because stocks have been rallying since April with only a few hiccups, and the last week or two has been one of those hiccups.
The S&P 500 (C-fund) chart still looks OK, but if we see the chart break below that 50-day average for more than a couple of days, all bets are off. But for now, it looks too early to make that call. Selling at the top is a great feeling, but I tried that a couple of times already since the new highs in late June, and that didn't work out. That said, my confidence level in a rally makes me as nervous as any other contrarian indicator. At least I know that.
I'm nervously optimistic.
The 10-year Treasury Yield was down again and it getting comfortable below 4%. The stock market isn't behaving well with it below 4%, so the bulls want to see this stabilize soon. It can stay below 4%, but stabilizing there would help.
The dollar (UUP) was up, hit that 200-day simple moving average (red), and reversed down again. Technical analysis seems silly to some people, but it works too often to dismiss it. Something will have to give here - that average, or the blue trading channel.
It was reported late yesterday that President Trump believes there will be a deal with China on rare earths, soybeans, and nuclear issues, and perhaps that will set a more positive tone if the origins of this recent decline, the Chinese tariff negotiations, are behind us. With those poor earnings last night but the future slightly positive, this could be helping.
DWCPF Index (S-Fund) did it again - a 4th test of the 50-day moving average, but it successfully held again. I don't like all of these tests because eventually they don't hold. But if that is the case, the 12 tests at a breakout to new highs would mean that resistance is weakening as well. It did close below the bottom of the red trading channel, so it needs to recapture that area first before we talk about a breakout to new highs.
ACWX (I-fund) was fairly flat yesterday, holding up better than the US stocks after a modest dip in the dollar.
BND (bonds / F-fund) closed yet again above the old resistance line after a flat day for bonds.
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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