04/13/26
Stocks were mixed on Friday after a hot CPI report and nervous investors heading into the weekend with no resolution with Iran. It turned out to be a second very good week for the stock market, with the S&P 500 now a stone's throw away from its all time highs, despite the chaos in March. All eyes remain on the price of oil, which has been used as a barometer for the war
The March CPI data was hot, although most expected a high number because of the rapid increase in the price of oil and gasoline. We've heard the word transient before in 2021 about inflation, but this could truly be a one hit wonder if we get with resolution in Iran, but that is obviously not a certainty.
- The food index was unchanged month-over-month and up 2.7% year-over-year.
- The energy index was up 10.9% month-over-month and up 12.5% year-over-year.
- The shelter index was up 0.3% month-over-month and up 3.0% year-over-year.
The 10-year Treasury yield was up on the data but remains in a short-term downtrend of the highs for now. It has been holding at support, and that is a possible bull flag, so another move higher could be shaping up.
The dollar was down and that had something to do with the I-fund leading on Friday as the only stock or bond TSP fund to close with a gain.
The price of oil was down but on Friday it felt like a long, and busy weekend between the US and the Middle East as the battle over the Strait of Hormuz continues. It is at support now, but if that could break, the psychological advantage of seeing an 8 handle (< $90) on the price of oil could help with the downside momentum. On the other hand, if the battle intensifies, that support could hold and we may be looking at triple digits again.
Update: The futures opened and the price of oil was up $7 to 104, so here we go.
My concern now is that the weekend headlines could provoke a negative open on Monday. (Update: The futures opened sharply lower so it will be another Monday, gap and on the downside, so the bulls have some work to do or the Island Reversal is in play.) Even though gaps on Monday morning can't always be trusted, and downside gap has the potential to create a formation that would be bearish for the short-term, and that is an bearish Island Reversal. I don't know if that is what will happen, but as you'll see in all three TSP Stock Fund charts, there is a potential for that to occur if we we don't start seeing the rally resume soon - especially on the S-fund chart.
DWCPF (S-fund) has the Island Reversal potential, and it will also be dealing with the overhead resistance for a fourth straight day since last Wednesday's gap up. Backing and filling the gap is always a possibility, as we all know, but an Island reversal has a more of a negative connotation than just filling a gap.
The S&P 500 (C-fund) looks slightly better with the more modest loss on Friday, but the open gap below is still there, and a gap down, especially if the 50-day moving average fails after holding for three days since the gap up, means n Island Reversal would be in play. There is resistance in the area so a quick fix here would be another positive day or two, but it's not looking good in the short-term.
The PMO and MACD Indicators look pretty good here, but maybe a little overbought in the short-term.
This chart shows how much the recent pullback since the Iran was started, has lowered the forward Price to Earnings ratio (P/E) of the S&P 500 and tech. This is not the worst development since it has taken some of the extreme forward looking valuations out of the stock market for futures quarters. This would be something Warren Buffett might be looking for to buy.
We'll get the PPI producer prices data on Tuesday this week. Forecasts are looking for a 1.3% gain and a 4.1% year over year gain. Core PPI (excludes food and energy) estimates are +0.5% and +3.7%.
It looks like another negative open, and we'll see how eager, or not, the bulls are when that opening bell rings.
Additional TSP Fund Charts:
ACWX (I-fund) closed up on the day to lead the TSP funds on Friday. We have the making of an Island Reversal here as well, if it gaps down at the open. The gap is there for the bears to take, but overall, this may end up being another buying opportunity, even if the gap does get filled.
BND (bonds / F-fund) sit in the wedge looking for direction. The Sunday futures show yields up, so that would be a drag on this chart if it holds, and that puts the lower support line in jeopardy again.
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 use additional methods and strategies to determine fund positions.
Stocks were mixed on Friday after a hot CPI report and nervous investors heading into the weekend with no resolution with Iran. It turned out to be a second very good week for the stock market, with the S&P 500 now a stone's throw away from its all time highs, despite the chaos in March. All eyes remain on the price of oil, which has been used as a barometer for the war
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The March CPI data was hot, although most expected a high number because of the rapid increase in the price of oil and gasoline. We've heard the word transient before in 2021 about inflation, but this could truly be a one hit wonder if we get with resolution in Iran, but that is obviously not a certainty.
- The food index was unchanged month-over-month and up 2.7% year-over-year.
- The energy index was up 10.9% month-over-month and up 12.5% year-over-year.
- The shelter index was up 0.3% month-over-month and up 3.0% year-over-year.
The 10-year Treasury yield was up on the data but remains in a short-term downtrend of the highs for now. It has been holding at support, and that is a possible bull flag, so another move higher could be shaping up.
The dollar was down and that had something to do with the I-fund leading on Friday as the only stock or bond TSP fund to close with a gain.
The price of oil was down but on Friday it felt like a long, and busy weekend between the US and the Middle East as the battle over the Strait of Hormuz continues. It is at support now, but if that could break, the psychological advantage of seeing an 8 handle (< $90) on the price of oil could help with the downside momentum. On the other hand, if the battle intensifies, that support could hold and we may be looking at triple digits again.
Update: The futures opened and the price of oil was up $7 to 104, so here we go.
My concern now is that the weekend headlines could provoke a negative open on Monday. (Update: The futures opened sharply lower so it will be another Monday, gap and on the downside, so the bulls have some work to do or the Island Reversal is in play.) Even though gaps on Monday morning can't always be trusted, and downside gap has the potential to create a formation that would be bearish for the short-term, and that is an bearish Island Reversal. I don't know if that is what will happen, but as you'll see in all three TSP Stock Fund charts, there is a potential for that to occur if we we don't start seeing the rally resume soon - especially on the S-fund chart.
DWCPF (S-fund) has the Island Reversal potential, and it will also be dealing with the overhead resistance for a fourth straight day since last Wednesday's gap up. Backing and filling the gap is always a possibility, as we all know, but an Island reversal has a more of a negative connotation than just filling a gap.
The S&P 500 (C-fund) looks slightly better with the more modest loss on Friday, but the open gap below is still there, and a gap down, especially if the 50-day moving average fails after holding for three days since the gap up, means n Island Reversal would be in play. There is resistance in the area so a quick fix here would be another positive day or two, but it's not looking good in the short-term.
The PMO and MACD Indicators look pretty good here, but maybe a little overbought in the short-term.
This chart shows how much the recent pullback since the Iran was started, has lowered the forward Price to Earnings ratio (P/E) of the S&P 500 and tech. This is not the worst development since it has taken some of the extreme forward looking valuations out of the stock market for futures quarters. This would be something Warren Buffett might be looking for to buy.
We'll get the PPI producer prices data on Tuesday this week. Forecasts are looking for a 1.3% gain and a 4.1% year over year gain. Core PPI (excludes food and energy) estimates are +0.5% and +3.7%.
It looks like another negative open, and we'll see how eager, or not, the bulls are when that opening bell rings.
Additional TSP Fund Charts:
ACWX (I-fund) closed up on the day to lead the TSP funds on Friday. We have the making of an Island Reversal here as well, if it gaps down at the open. The gap is there for the bears to take, but overall, this may end up being another buying opportunity, even if the gap does get filled.
BND (bonds / F-fund) sit in the wedge looking for direction. The Sunday futures show yields up, so that would be a drag on this chart if it holds, and that puts the lower support line in jeopardy again.
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.
