10/06/25
After a 3-day pullback, the S&P 500 has now been up for 6 straight days, although Friday's gain was just 0.01%. That was enough for yet another all-time closing high for the index, while the Dow, and the Russell 2000 index, also closed at a new all-time high on Friday so small caps are making a run as well. Yields were up so the F-fund came down, and the I-fund led the way keeping it the hottest TSP fund of the year.
Stocks have been doing well. It's not overwhelming, but the +14% return in the S&P 500 is impressive at this point in the year, and in October it is trying to have its 6th consecutive month of gains, which started on the heals of a 3-months of losses. There hasn't been a 3% pullback since this rally started in April, and despite all of that, investor sentiment is still only slightly bullish, so there is a lot of skepticism out there - which is actually a catalyst for the stock market and why trying to buy any meaningful dip has become so difficult.
There's no shortage of opinions out there and if you scroll through X or wherever, you can probably read hours of posts telling you why stocks should be going down, and hours more of posts suggesting a move higher is certain.
We've seen stats suggesting a strong third quarter leads to a strong fourth quarter, and while others agree, they show that Octobers tend to be rough despite the gains in the 4th quarter.
Here's one from Wayne Whaley on X: OCTOBER S&P PERFORMANCE VS THIRD QUARTER PERFORMANCE
"Over the last 51 years, the S&P is 30-21 [30 positive, 21 negative] in October for an avg gain of 1.07%.
"The 5% moves in either direction in October are 12-5 to the positive with nine of those twelve +5% months occurring after a negative third Quarter.
"Four of the Five 5% losses in October came after a +5% Quarter."
The S&P 500 was up 7.8% in the 3rd quarter.
Source: Wayne Whaley
If the statistics dictate the outcome, maybe it's different for the small caps? That's not usually the case, but small caps have been battling back hard lately. The good news, the Russell 2000 and the S-fund DWCPF have finally made new all time highs. This could lead to a major breakout in the coming months and years, but in the short-term, the resistance is still in the area and the market has been long overdue for a 3% to 5% pullback, and being October with a government shutdown, the volatility could exaggerate a decline so maybe it's a little worse than that.
The trend is up however, and given the fact that we have seen a lot of skepticism, the dips have remained shallow and, depending on whether you look at the weekly or monthly chart of the S&P 500, the recent break above resistance on these charts may be opening the door to frustrate the underinvested even longer.
So while we know some kind of hiccup is inevitable, the surprise may remain to the upside, but we can't dismiss a possible October shake out.
The Dow Transportation Index hasn't been keeping up but it has been coiling up for what may be a big move, one way or the other, in the near future. It made its highest intraday peak in over a month on Friday and support (blue line) suggests it could be a move to the upside, but look at all of those negative reversal days in recent weeks. Who is putting all of that daily pressure on keeping this economically sensitive Index down?
I have been playing some defense for weeks and regretting it, but still making money in a stock market that seems overdue for some selling. However, I can tell from many sentiment type indicators that my pessimistic view is pretty common, and that tends to lead to more upside, again frustrating the people looking for a pullback. That is, until we get a move like in late 2018 - just as everyone was probably thinking the same thing - that stocks are hot heading into the the seasonally strong 4th quarter.
And we got what you see above - October volatility, and then some.
The S&P 500 (C-fund) ticked up 0.01% on Friday to make it six consecutive positive days for the index. The trend is up, the rally is getting extended, but it may be narrowing which could lead to some kind of breakout, or breakdown in the near future. There was a bit of a negative reversal on Friday, and that may just be a result of traders selling before the weekend while the government remains shut down. If a deal is made, perhaps we'll get a relief rally, although relief from what? On the other hand, it could be a sell the news reaction, although there hasn't been a lot of selling going on for a long timing.
The DWCPF (S-fund) has been impressively gaining momentum although it closed weakly on Friday creating a negative reversal candlestick to end the week, which created a modest double top look.
ACWX (I-fund) made another new high and now it is trying to blast through the top of its long trading channel. It is by far the best performing TSP fund this year, but can it keep up a pace even more vertical than the last several months, or is it time for test of the lower end of the channel?
BND (bonds / F-fund) closed lower after another test of the blue dashed resistance line. The resistance is rising, so it can be considered bullish for bonds, but that gap remains partially open below and that means it is still a potential pullback target. A move back above that blue dashed line would help put the gap in the rear-view mirror.
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.
After a 3-day pullback, the S&P 500 has now been up for 6 straight days, although Friday's gain was just 0.01%. That was enough for yet another all-time closing high for the index, while the Dow, and the Russell 2000 index, also closed at a new all-time high on Friday so small caps are making a run as well. Yields were up so the F-fund came down, and the I-fund led the way keeping it the hottest TSP fund of the year.
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Stocks have been doing well. It's not overwhelming, but the +14% return in the S&P 500 is impressive at this point in the year, and in October it is trying to have its 6th consecutive month of gains, which started on the heals of a 3-months of losses. There hasn't been a 3% pullback since this rally started in April, and despite all of that, investor sentiment is still only slightly bullish, so there is a lot of skepticism out there - which is actually a catalyst for the stock market and why trying to buy any meaningful dip has become so difficult.
There's no shortage of opinions out there and if you scroll through X or wherever, you can probably read hours of posts telling you why stocks should be going down, and hours more of posts suggesting a move higher is certain.
We've seen stats suggesting a strong third quarter leads to a strong fourth quarter, and while others agree, they show that Octobers tend to be rough despite the gains in the 4th quarter.
Here's one from Wayne Whaley on X: OCTOBER S&P PERFORMANCE VS THIRD QUARTER PERFORMANCE
"Over the last 51 years, the S&P is 30-21 [30 positive, 21 negative] in October for an avg gain of 1.07%.
"The 5% moves in either direction in October are 12-5 to the positive with nine of those twelve +5% months occurring after a negative third Quarter.
"Four of the Five 5% losses in October came after a +5% Quarter."
The S&P 500 was up 7.8% in the 3rd quarter.
Source: Wayne Whaley
If the statistics dictate the outcome, maybe it's different for the small caps? That's not usually the case, but small caps have been battling back hard lately. The good news, the Russell 2000 and the S-fund DWCPF have finally made new all time highs. This could lead to a major breakout in the coming months and years, but in the short-term, the resistance is still in the area and the market has been long overdue for a 3% to 5% pullback, and being October with a government shutdown, the volatility could exaggerate a decline so maybe it's a little worse than that.
The trend is up however, and given the fact that we have seen a lot of skepticism, the dips have remained shallow and, depending on whether you look at the weekly or monthly chart of the S&P 500, the recent break above resistance on these charts may be opening the door to frustrate the underinvested even longer.
So while we know some kind of hiccup is inevitable, the surprise may remain to the upside, but we can't dismiss a possible October shake out.
The Dow Transportation Index hasn't been keeping up but it has been coiling up for what may be a big move, one way or the other, in the near future. It made its highest intraday peak in over a month on Friday and support (blue line) suggests it could be a move to the upside, but look at all of those negative reversal days in recent weeks. Who is putting all of that daily pressure on keeping this economically sensitive Index down?
I have been playing some defense for weeks and regretting it, but still making money in a stock market that seems overdue for some selling. However, I can tell from many sentiment type indicators that my pessimistic view is pretty common, and that tends to lead to more upside, again frustrating the people looking for a pullback. That is, until we get a move like in late 2018 - just as everyone was probably thinking the same thing - that stocks are hot heading into the the seasonally strong 4th quarter.
And we got what you see above - October volatility, and then some.
The S&P 500 (C-fund) ticked up 0.01% on Friday to make it six consecutive positive days for the index. The trend is up, the rally is getting extended, but it may be narrowing which could lead to some kind of breakout, or breakdown in the near future. There was a bit of a negative reversal on Friday, and that may just be a result of traders selling before the weekend while the government remains shut down. If a deal is made, perhaps we'll get a relief rally, although relief from what? On the other hand, it could be a sell the news reaction, although there hasn't been a lot of selling going on for a long timing.
The DWCPF (S-fund) has been impressively gaining momentum although it closed weakly on Friday creating a negative reversal candlestick to end the week, which created a modest double top look.
ACWX (I-fund) made another new high and now it is trying to blast through the top of its long trading channel. It is by far the best performing TSP fund this year, but can it keep up a pace even more vertical than the last several months, or is it time for test of the lower end of the channel?
BND (bonds / F-fund) closed lower after another test of the blue dashed resistance line. The resistance is rising, so it can be considered bullish for bonds, but that gap remains partially open below and that means it is still a potential pullback target. A move back above that blue dashed line would help put the gap in the rear-view mirror.
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.
