May 12, 2025
After a strong open on Friday morning, stocks quickly gave back the early gains then treaded water for most of the day and the indices closed fairly flat. The I-fund led on weakness in the dollar, and the F-fund (bonds) was up. All of that is rear-view information as the weekend headlines were all about the US and China working on a trade deal, and after some progress, the futures were up sharply on Sunday night.
That's the good news, and the market may have needed it as the rally off the lows had gotten overbought in the short-term, and the indices were stalling near resistance.
On Friday, although more stocks were down on the Nasdaq than up, trading volume was decisively in favor of advancing volume. However, there were more new 52-week lows made on the Nasdaq than 52-week highs. The NYSE breadth was moderately positive.
I was intrigued by the action in the Nasdaq with those new lows and negative breadthwith positive trading volume, and I ran across this from sentimentrader.com. This chart says that after the Nasdaq has risen more than 14% off its 52 week low, as it recently has, the following week tends to be a down week. That would be this week. The good news, if that drawdown is less than 3%, then the the next 12-months tend to be very good. If it is more then 3%, not so much.
The futures are indicating a potential strong opening on Monday, and that is also very intriguing because at +70 points or so at 7:30 PM on Sunday, the S&P 500 has the stage set for a possible open above 5700 - a level it has not closed above since late March. If the morning rally fails, we have all kind of warning signs from overhead resistance to historical precedence.
The 10-Year Treasury Yield was flat on Friday but the dollar (UUP) was down helping the I-fund, but the new trend in UUP may be positive.
The Transportation Index is bumping its head against that resistance again and this looks more and more like a bear flag with each day. The 50-day EMA hasn't been a major factor on this chart recently, but it remains to be stuck below it. A pop on the trade headline above resistance would be very cleansing for this chart.
I don't know how official any trade deal is with China but for at least the opening bell it trumps the technical picture. However, if stocks can't hold onto those again and the charts fail to reclaim any major resistance, then this could be a major fake out.
As I have been saying, I am bullish for the year but in the short term I am not as confident that the rally can continue unabated so the reaction to this news and gap up today will be very telling.
DWCPF (S-fund) continues to flirt with that overhead resistance, and perhaps a gap up this morning will overtake those moving averages. The Russell 2000 small caps futures, not the S-fund but they react similarly, is up almost 2% in the Sunday night futures, and that would put DWCPF very close to 2150 should it hold.
ACWX (I-fund) has been coiling for something. There is an open gap below that could still get filled, and while this is due for a meaningful pullback, we need to respect the strong trend. It could take a major positive move in the dollar to give this chart a proper pullback.
The BND (F-fund) was up modestly on Friday, and yields are up overnight after the trade headline, so bonds could open on the downside on Monday.
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.
After a strong open on Friday morning, stocks quickly gave back the early gains then treaded water for most of the day and the indices closed fairly flat. The I-fund led on weakness in the dollar, and the F-fund (bonds) was up. All of that is rear-view information as the weekend headlines were all about the US and China working on a trade deal, and after some progress, the futures were up sharply on Sunday night.
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That's the good news, and the market may have needed it as the rally off the lows had gotten overbought in the short-term, and the indices were stalling near resistance.
On Friday, although more stocks were down on the Nasdaq than up, trading volume was decisively in favor of advancing volume. However, there were more new 52-week lows made on the Nasdaq than 52-week highs. The NYSE breadth was moderately positive.
I was intrigued by the action in the Nasdaq with those new lows and negative breadthwith positive trading volume, and I ran across this from sentimentrader.com. This chart says that after the Nasdaq has risen more than 14% off its 52 week low, as it recently has, the following week tends to be a down week. That would be this week. The good news, if that drawdown is less than 3%, then the the next 12-months tend to be very good. If it is more then 3%, not so much.
The futures are indicating a potential strong opening on Monday, and that is also very intriguing because at +70 points or so at 7:30 PM on Sunday, the S&P 500 has the stage set for a possible open above 5700 - a level it has not closed above since late March. If the morning rally fails, we have all kind of warning signs from overhead resistance to historical precedence.
The 10-Year Treasury Yield was flat on Friday but the dollar (UUP) was down helping the I-fund, but the new trend in UUP may be positive.
The Transportation Index is bumping its head against that resistance again and this looks more and more like a bear flag with each day. The 50-day EMA hasn't been a major factor on this chart recently, but it remains to be stuck below it. A pop on the trade headline above resistance would be very cleansing for this chart.
I don't know how official any trade deal is with China but for at least the opening bell it trumps the technical picture. However, if stocks can't hold onto those again and the charts fail to reclaim any major resistance, then this could be a major fake out.
As I have been saying, I am bullish for the year but in the short term I am not as confident that the rally can continue unabated so the reaction to this news and gap up today will be very telling.
DWCPF (S-fund) continues to flirt with that overhead resistance, and perhaps a gap up this morning will overtake those moving averages. The Russell 2000 small caps futures, not the S-fund but they react similarly, is up almost 2% in the Sunday night futures, and that would put DWCPF very close to 2150 should it hold.
ACWX (I-fund) has been coiling for something. There is an open gap below that could still get filled, and while this is due for a meaningful pullback, we need to respect the strong trend. It could take a major positive move in the dollar to give this chart a proper pullback.
The BND (F-fund) was up modestly on Friday, and yields are up overnight after the trade headline, so bonds could open on the downside on Monday.
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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