05/20/26
Stocks pulled back for a third straight day yesterday with tech, small caps, and the I-fund lagging the S&P 500. We were due for a dip as tech became a little frothy, and now tech is releasing some of that excess steam. The selling is also a result of the strength in price of oil and bond yields, which have both been causing most of the concerns on Wall Street.
The price of oil remains stubbornly high and continues to coil within a pennant formation. There is room on the downside in this formation, down to 95, but these tend to eventually break to the upside, so investors are getting nervous.
The 10-year Treasury Yield is also making investors nervous as it popped to new highs again yesterday.
This move in yields has moved the probability of Fed rate hike by the July 29 meeting higher. It's not overly significant, but the chances of a hike went from a 0% last week, to 15% yesterday, and the chance of a cut went from 17% a month ago, to less than 1%.
The S&P 500 (C-fund) is dipping on these developments and the question is whether these moves in oil and interest rates are new trends, or just temporary noise that is knocking down a hot stock market. The open gap near 7273 seems like a logical target, if Nvidia doesn't send the market higher with a big earnings report first.
The MACD Histogram continues to show deterioration, but at least it is not diverging anymore. The diverging from mid-April to last week's peak was somewhat of a warning for this recent decline.
The PMO momentum indicator above is starting to rollover from its strong position. Sometimes a test of the indicator down to its moving average can trigger a short relief rally, if not a peak of some sort.
If we look back 18 months at the PMO Indicator, we saw some modest fake out rollovers that did produce fake outs that saw the S&P 500 rebound quickly. Those are the green arrows. However, the red arrows were actual crossovers that were serious and preceded market weakness.
Just an FYI, I found this chart of the average and mean retirement savings by age. How are you doing? The average numbers are skewed by the outlier extreme account balances. The median amount is probably more meaningful.
Nvidia reports earnings after the closing bell today. Obviously a big one. It has fallen after 5 of the past 7 earnings releases, but obviously buying the dips in this one has been a winning strategy long-term.
Holiday Closing: Some financial markets will be closed on Monday, 5/25 in observance of Memorial Day. The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (May 25) will be processed Tuesday night (May 26) at Tuesday's closing share prices.
Additional TSP Fund Charts:
DWCPF (S-fund) broke below that February peak for a second time in a few weeks. It just barely made a lower low compared to the late April lows. The blue "F" flag broke down, and that can be troubling, but perhaps Nvidia will patch things up before we can confirm the break down. Otherwise, look for a test of the 50-day average, which wouldn't be the worst thing that could happen to a scorching market.
ACWX (I-fund) got hit with a stronger dollar yesterday, but at least it kept up with the small caps. It also stayed within its blue "F" flag and has a chance to rebound off it, and its 50-day average. If those can't hold, be careful here.
BND (bonds / F-fund) broke down and that's now three closes below the 200-day average. It made a lower low compared to the March low. A snap back rally is possible, but after the lower high in April, this lower low officially puts BND and the F-fund in the downtrend category.
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
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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 pulled back for a third straight day yesterday with tech, small caps, and the I-fund lagging the S&P 500. We were due for a dip as tech became a little frothy, and now tech is releasing some of that excess steam. The selling is also a result of the strength in price of oil and bond yields, which have both been causing most of the concerns on Wall Street.
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The price of oil remains stubbornly high and continues to coil within a pennant formation. There is room on the downside in this formation, down to 95, but these tend to eventually break to the upside, so investors are getting nervous.
The 10-year Treasury Yield is also making investors nervous as it popped to new highs again yesterday.
This move in yields has moved the probability of Fed rate hike by the July 29 meeting higher. It's not overly significant, but the chances of a hike went from a 0% last week, to 15% yesterday, and the chance of a cut went from 17% a month ago, to less than 1%.
The S&P 500 (C-fund) is dipping on these developments and the question is whether these moves in oil and interest rates are new trends, or just temporary noise that is knocking down a hot stock market. The open gap near 7273 seems like a logical target, if Nvidia doesn't send the market higher with a big earnings report first.
The MACD Histogram continues to show deterioration, but at least it is not diverging anymore. The diverging from mid-April to last week's peak was somewhat of a warning for this recent decline.
The PMO momentum indicator above is starting to rollover from its strong position. Sometimes a test of the indicator down to its moving average can trigger a short relief rally, if not a peak of some sort.
If we look back 18 months at the PMO Indicator, we saw some modest fake out rollovers that did produce fake outs that saw the S&P 500 rebound quickly. Those are the green arrows. However, the red arrows were actual crossovers that were serious and preceded market weakness.
Just an FYI, I found this chart of the average and mean retirement savings by age. How are you doing? The average numbers are skewed by the outlier extreme account balances. The median amount is probably more meaningful.
Nvidia reports earnings after the closing bell today. Obviously a big one. It has fallen after 5 of the past 7 earnings releases, but obviously buying the dips in this one has been a winning strategy long-term.
Holiday Closing: Some financial markets will be closed on Monday, 5/25 in observance of Memorial Day. The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (May 25) will be processed Tuesday night (May 26) at Tuesday's closing share prices.
Additional TSP Fund Charts:
DWCPF (S-fund) broke below that February peak for a second time in a few weeks. It just barely made a lower low compared to the late April lows. The blue "F" flag broke down, and that can be troubling, but perhaps Nvidia will patch things up before we can confirm the break down. Otherwise, look for a test of the 50-day average, which wouldn't be the worst thing that could happen to a scorching market.
ACWX (I-fund) got hit with a stronger dollar yesterday, but at least it kept up with the small caps. It also stayed within its blue "F" flag and has a chance to rebound off it, and its 50-day average. If those can't hold, be careful here.
BND (bonds / F-fund) broke down and that's now three closes below the 200-day average. It made a lower low compared to the March low. A snap back rally is possible, but after the lower high in April, this lower low officially puts BND and the F-fund in the downtrend category.
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
Updated monthly:
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.
