11/03/25
Last week was a busy volatile week for the stock market with Magnificent 7 earnings, an interest rate cut but a Fed who sounded less dovish, and a government shutdown that continues to make economic data unavailable. Friday was positive but also very volatile as the indices moved from positive to negative and back to positive. Bonds were flat and the dollar was up.
We DID NOT get the key inflation PCE Prices Personal Spending data on Friday as was scheduled. The bea.gov website just had a notice posted that said, "Due to a lapse in appropriations, this website is not being updated."
The stock market hasn't been too concerned about the shut down although, as we talked about last week, we did start to see some internal issues with the advance / decline data compared to the indices.
On Friday, breadth was very positive with many more stocks up than down on the day, but a lot of people are talking about the new Hindenburg Omen Signal we got last week, and even on Friday we saw that many more stocks making a 52-week low, than a new high, despite the indices being so close to their all time highs. That's internal weakness.
According to investopedia.com, a Hindenburg Omen Signal is triggered when these Four criteria are met:
*The daily number of new 52-week highs and 52-week lows in a stock market index exceeds a threshold amount (typically set at 2.2%).
*The 52-week highs can't be more than twice the 52-week lows.
*The stock market index is still in an uptrend. A 10-week moving average or the 50-day rate of change indicator is used for this.
*The McClellan oscillator (MCO), a measure of the shift in market sentiment, is negative.
"Once these conditions are met, the Hindenburg omen is considered active for 30 trading days, and any additional signals during that period should be ignored. The Hindenburg omen is confirmed if the MCO is negative during the 30-day period and rejected if the MCO turns positive."
These signals have triggered before major market meltdowns in the past, but market declines don't always manifest after a signal. If we start seeing a series of these signals the odds a decline will probably rise. In other words, the signal last week wasn't great, but it doesn't mean much yet.
Right now we have some warnings, but as we talked about last week, there are plenty of catalysts for a continued rally in stocks, so for the next two months the market will be dealing with a lot of crosswinds from the breeze at the market's back with seasonality, and what many believe is an overpriced market due for a more serious pullback than the 2% to 3% dips we have been seeing in recent months.
One counter argument to the over-valuation is how good 3rd quarter earnings have been in the S&P 500 stocks compared to the estimates coming into earnings season. This helped P/E ratios (Price to Earnings) come down a bit.
The S&P 500 (C-fund) is just a couple of days off of its all time highs, but you can see that it has dipped back after touching the top of the trading channel that has been intact for months. There is certainly some room of the downside, and there are gaps still open just below so the chart may be vulnerable in the short-term, but will seasonality delay that clean up action?
Historically the month of November experiences a mid-month hiccup, but it is surrounded by a lot of green. So an early November pullback seems less likely, but seasonality is not generally a primary indicator.
Source: https://sentimentrader.com/
The 10-year Treasury Yield broke above the descending resistance line last week after the Fed's less dovish take on interest rates, but the 50-day EMA has held the past two trading days.
The dollar finally broke out above a couple of layers of resistance last week to surprise those expecting the dollar to continue to trend lower. It hasn't negatively impacted it much yet, but a stronger dollar is not beneficial to the I-fund.
We are supposed to get the October jobs report on Friday, but with the government still shut down, that may not happen.
The DWCPF Index (S-Fund) tested the lower end of its ascending trading channel again, and that is a lot of tests and the bulls need to see this get out of the area and rebound, otherwise the bears may eventually open the trap door.
Long-term, there is plenty of support in the 2450 - 2460 area. The 50-day average is currently at 2481.
ACWX (I-fund) was down modestly on Friday so it did show some relative weakness compared to the US funds, and a lot of that had to do with another gain in the dollar, which has been showing resilience.
BND (bonds / F-fund) was down slightly on Friday and that's two closes below the bottom of its trading channel. The 50-day EMA may need to prepare for a test if can't get back into the channel early this week. It is still trending higher, but we are seeing cracks now that the Fed had changed their tune a bit regarding the December rate cut.
Thanks so much for reading! We'll see you 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.
Last week was a busy volatile week for the stock market with Magnificent 7 earnings, an interest rate cut but a Fed who sounded less dovish, and a government shutdown that continues to make economic data unavailable. Friday was positive but also very volatile as the indices moved from positive to negative and back to positive. Bonds were flat and the dollar was up.
| Daily TSP Funds Return
More returns |
We DID NOT get the key inflation PCE Prices Personal Spending data on Friday as was scheduled. The bea.gov website just had a notice posted that said, "Due to a lapse in appropriations, this website is not being updated."
The stock market hasn't been too concerned about the shut down although, as we talked about last week, we did start to see some internal issues with the advance / decline data compared to the indices.
On Friday, breadth was very positive with many more stocks up than down on the day, but a lot of people are talking about the new Hindenburg Omen Signal we got last week, and even on Friday we saw that many more stocks making a 52-week low, than a new high, despite the indices being so close to their all time highs. That's internal weakness.
According to investopedia.com, a Hindenburg Omen Signal is triggered when these Four criteria are met:
*The daily number of new 52-week highs and 52-week lows in a stock market index exceeds a threshold amount (typically set at 2.2%).
*The 52-week highs can't be more than twice the 52-week lows.
*The stock market index is still in an uptrend. A 10-week moving average or the 50-day rate of change indicator is used for this.
*The McClellan oscillator (MCO), a measure of the shift in market sentiment, is negative.
"Once these conditions are met, the Hindenburg omen is considered active for 30 trading days, and any additional signals during that period should be ignored. The Hindenburg omen is confirmed if the MCO is negative during the 30-day period and rejected if the MCO turns positive."
These signals have triggered before major market meltdowns in the past, but market declines don't always manifest after a signal. If we start seeing a series of these signals the odds a decline will probably rise. In other words, the signal last week wasn't great, but it doesn't mean much yet.
Right now we have some warnings, but as we talked about last week, there are plenty of catalysts for a continued rally in stocks, so for the next two months the market will be dealing with a lot of crosswinds from the breeze at the market's back with seasonality, and what many believe is an overpriced market due for a more serious pullback than the 2% to 3% dips we have been seeing in recent months.
One counter argument to the over-valuation is how good 3rd quarter earnings have been in the S&P 500 stocks compared to the estimates coming into earnings season. This helped P/E ratios (Price to Earnings) come down a bit.
The S&P 500 (C-fund) is just a couple of days off of its all time highs, but you can see that it has dipped back after touching the top of the trading channel that has been intact for months. There is certainly some room of the downside, and there are gaps still open just below so the chart may be vulnerable in the short-term, but will seasonality delay that clean up action?
Historically the month of November experiences a mid-month hiccup, but it is surrounded by a lot of green. So an early November pullback seems less likely, but seasonality is not generally a primary indicator.
Source: https://sentimentrader.com/
The 10-year Treasury Yield broke above the descending resistance line last week after the Fed's less dovish take on interest rates, but the 50-day EMA has held the past two trading days.
The dollar finally broke out above a couple of layers of resistance last week to surprise those expecting the dollar to continue to trend lower. It hasn't negatively impacted it much yet, but a stronger dollar is not beneficial to the I-fund.
We are supposed to get the October jobs report on Friday, but with the government still shut down, that may not happen.
The DWCPF Index (S-Fund) tested the lower end of its ascending trading channel again, and that is a lot of tests and the bulls need to see this get out of the area and rebound, otherwise the bears may eventually open the trap door.
Long-term, there is plenty of support in the 2450 - 2460 area. The 50-day average is currently at 2481.
ACWX (I-fund) was down modestly on Friday so it did show some relative weakness compared to the US funds, and a lot of that had to do with another gain in the dollar, which has been showing resilience.
BND (bonds / F-fund) was down slightly on Friday and that's two closes below the bottom of its trading channel. The 50-day EMA may need to prepare for a test if can't get back into the channel early this week. It is still trending higher, but we are seeing cracks now that the Fed had changed their tune a bit regarding the December rate cut.
Thanks so much for reading! We'll see you 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.
