08/29/25
Another green day for the US indices as investors have been unfazed by any bad news that gets thrown at the market. Nvidia earnings were a bit of a disappointment but the dip buyers were quick to react and the stocks closed down just 0.79% after being down closer to 3% in early trading. The drama surrounding Trump firing the Fed governor -- no response from the market. Is this strength, or complacency?
(The most current commentary is always posted here: www.tsptalk.com/comments.php)
The GDP data was better than expected coming in at +3.3% growth for the second quarter. Far from economic trouble, and while that's rearview mirror data, it's the best estimate we have of growth right now.
Interestingly, yields have been falling despite this strong data, and it could be because of the Fed and their projected rate cuts. Not just 0.25% in September, but now they're looking out at possibly six 0.25% cuts into 2026, although they said the same thing coming into 2025 and we have had no cuts yet.
But this talk of lower rates are bringing small caps back into favor. We've been burned many times by small caps this year as they have given us false hope several times, and the S-fund is still lagging the other TSP stock funds for the year, although its coming up quick on the C-fund.
Here's some small caps indices and what they've been up to compared to other indices. I added the S-fund to the chart.
The S&P 500 / C-fund made a new high on Thursday although there wasn't explosive volume on the breakout. We can give it the excuse that we are in holiday trading mode right now, but that could continue for another week. Generally we'd like to see higher volume on a breakout to show conviction, but as I mentioned yesterday, some indicators are not confirming the new highs as the momentum is on the ho-hum side.
The PMO and the MACD Histogram show negative divergences.
Fighting the rally hasn't helped but we are seeing signs of complacency so I would say enjoy the rally if you're in stocks and making money, but you might want to sleep with one eye open as we head into September and October.
Here's some stats of market returns surrounding Labor Day weekend. Today is LD-1 (Labor Day weekend minus 1 day) and it has historically been a very good day for stocks, but if we only go back to 1990, it hasn't been as impressive.
Source: https://www.cxoadvisory.com/calendar-effects/stock-returns-around-labor-day/
Next week has some issues as well (LD+ #), but we're in a bull market and nothing has been able to stop the bulls yet.
The Transportation Index continues to lag the other major indices. It is generally considered a market leader and it is very economically sensitive. It keeps grinding higher but that angle of incline has more of a bear flag look to it so I am slightly concerned about that failing.
We get the PCE Prices inflation data this morning, along with Personal Spending and Income data.
Holiday Closing: from tsp.gov:
"Some financial markets will be closed on Monday, September 1, in observance of Labor Day. The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (September 1) will be processed Tuesday night (September 2) at Tuesday's closing share prices."
The DWCPF / S-fund was up and banged its head on that upper resistance line, which is rising, but like in July, it could climb that resistance. Or it it could take a break and smash down to the bottom of the channel again which it has been doing about once a month lately. It looks good, but what happens to small caps if the inflation data is strong today? I don't know if it would impact the Fed's decision to cut rates next month because the Fed seems more worried about the labor market, but it could send yields higher and that may slow down the rally in small caps. However, if the inflation data is benign, the small caps could move into another gear, as it seems to be trying to do.
ACWX (I-fund) remains in an uptrend like US stocks, but it has been getting the help from a weakening dollar which was down again yesterday. There's still several open gaps below which makes it tough to be comfortable about buying or adding here.
BND (bonds / F-fund) broke out yesterday so the bull flag did its job and it is now above a few layers of resistance, although I only show two. The bond market is pricing in more rate cuts.
Thanks so much for reading! Have a great weekend!
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.
Another green day for the US indices as investors have been unfazed by any bad news that gets thrown at the market. Nvidia earnings were a bit of a disappointment but the dip buyers were quick to react and the stocks closed down just 0.79% after being down closer to 3% in early trading. The drama surrounding Trump firing the Fed governor -- no response from the market. Is this strength, or complacency?
(The most current commentary is always posted here: www.tsptalk.com/comments.php)
| Daily TSP Funds Return More returns |
The GDP data was better than expected coming in at +3.3% growth for the second quarter. Far from economic trouble, and while that's rearview mirror data, it's the best estimate we have of growth right now.
Interestingly, yields have been falling despite this strong data, and it could be because of the Fed and their projected rate cuts. Not just 0.25% in September, but now they're looking out at possibly six 0.25% cuts into 2026, although they said the same thing coming into 2025 and we have had no cuts yet.
But this talk of lower rates are bringing small caps back into favor. We've been burned many times by small caps this year as they have given us false hope several times, and the S-fund is still lagging the other TSP stock funds for the year, although its coming up quick on the C-fund.
Here's some small caps indices and what they've been up to compared to other indices. I added the S-fund to the chart.
The S&P 500 / C-fund made a new high on Thursday although there wasn't explosive volume on the breakout. We can give it the excuse that we are in holiday trading mode right now, but that could continue for another week. Generally we'd like to see higher volume on a breakout to show conviction, but as I mentioned yesterday, some indicators are not confirming the new highs as the momentum is on the ho-hum side.
The PMO and the MACD Histogram show negative divergences.
Fighting the rally hasn't helped but we are seeing signs of complacency so I would say enjoy the rally if you're in stocks and making money, but you might want to sleep with one eye open as we head into September and October.
Here's some stats of market returns surrounding Labor Day weekend. Today is LD-1 (Labor Day weekend minus 1 day) and it has historically been a very good day for stocks, but if we only go back to 1990, it hasn't been as impressive.
Source: https://www.cxoadvisory.com/calendar-effects/stock-returns-around-labor-day/
Next week has some issues as well (LD+ #), but we're in a bull market and nothing has been able to stop the bulls yet.
The Transportation Index continues to lag the other major indices. It is generally considered a market leader and it is very economically sensitive. It keeps grinding higher but that angle of incline has more of a bear flag look to it so I am slightly concerned about that failing.
We get the PCE Prices inflation data this morning, along with Personal Spending and Income data.
Holiday Closing: from tsp.gov:
"Some financial markets will be closed on Monday, September 1, in observance of Labor Day. The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (September 1) will be processed Tuesday night (September 2) at Tuesday's closing share prices."
The DWCPF / S-fund was up and banged its head on that upper resistance line, which is rising, but like in July, it could climb that resistance. Or it it could take a break and smash down to the bottom of the channel again which it has been doing about once a month lately. It looks good, but what happens to small caps if the inflation data is strong today? I don't know if it would impact the Fed's decision to cut rates next month because the Fed seems more worried about the labor market, but it could send yields higher and that may slow down the rally in small caps. However, if the inflation data is benign, the small caps could move into another gear, as it seems to be trying to do.
ACWX (I-fund) remains in an uptrend like US stocks, but it has been getting the help from a weakening dollar which was down again yesterday. There's still several open gaps below which makes it tough to be comfortable about buying or adding here.
BND (bonds / F-fund) broke out yesterday so the bull flag did its job and it is now above a few layers of resistance, although I only show two. The bond market is pricing in more rate cuts.
Thanks so much for reading! Have a great weekend!
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.
