12/15/25
Stocks pulled back on Friday after Broadcom repeated Oracle's earnings troubles, and large cap tech led the market lower as concerns about an AI bubble persist. Yields and the dollar were up adding to the pressure on small caps, and prices in general. The loss took the C-fund into the red for the month while the S and I-funds remain firmly positive, but could be vulnerable if yields and the dollar keep rising.
First it was Oracle and stocks sold off early on Thursday after their disappointing earnings, but the indices shook that off and the market rallied into the close. The next day Broadcom had a similar fate and stocks sold off on Friday morning, but this time they didn't come back.
The charts still look fine for now and I would be surprised if any early weakness this week does not get bought rather quickly. Many fund managers have lagged the resilient market index returns and they are not likely to let a year end rally go unattended. Also, most fund managers are heavy into the Mag 7 type of big tech stocks and their recent underperformance could push more money into what is working.
Here is the Big Tech ETF MAGS, and you can see that it has that lower high forming after a lower low in November. That is actually a potential bull flag, but that means it could still come down to test the bottom of that flag again, if it does not start moving back up soon. However, bull flags do tend to eventually break to the upside. The other possibility is that it is a bearish head and shoulders. Let's see how it develops.
Compare that to the charts of some early year laggards like the Transportation Index and the Russell 2000 small caps.
These are clearly working, and the question is whether fund mangers want to get onboard these high flyers in lieu of big tech, to help pad their 2025 returns for their year end reports. Of course the average investor is seeing this as well, and will have a decision to make whether to stick with the struggling bigger names, or move over to these outperforming sectors that have caught fire.
The S&P 500 (C-fund) chart looks good. It took a hit from Oracle and Broadcom but for now I would call this part of the double top pullback and a right shoulder of an inverted head and shoulders pattern potentially forming. These also tend to eventually break to the upside, but if it doesn't make an immediate run back toward the recent highs, it could just be some temporary churning inside the right shoulder, which wouldn't be bearish unless support levels start breaking down.
The 10-year Treasury Yield popped higher again, retesting that 200-day average and closing at its highest level since early September. After the breakout above that red pennant formation, the yield has successfully tested that line on a pullback last week, as well as the 50-day EMA, and both held as support.
The dollar was up but looked to be merely trying to fill in the open gap it created with Thursday's gap down. It has fallen below the 50-day average as well as the neckline of a head and shoulders pattern, which suggests it could go lower, although the 200-day EMA may try to hold as support.
The seasonality calendar is more favorable to the bulls this time of year, but you can see that we're still in the mid-December lull for stocks, and the Santa Claus rally doesn't officially begin until the 21st.
Source: sentimentrader.com
Those are tendencies of course but because the stock market has had such a solid year, the Santa Claus rally tends to be more likely. We've had some poor Decembers over the year but they tend to come during years where we see more tax selling in mid-to-late December.
The crypto-currencies have been getting clobbered in recent weeks and that may cause some tax selling there, which could negatively impact the the stock market. But once we get passed the 20th of the month, that tends to subside.
We will get the October and November monthly jobs data on Tuesday of this week. It's old data so while it could have a short-term impact on trading, the market has pretty much priced in the situation. Estimates for the October report are a gain of 55,000 jobs, and November's estimate is +25,000. Not great, but not surprising at this point, and it's also fodder for rates to remain low.
The DWCPF Index (S-Fund) hit a wall of resistance at the bottom of the old trading channel. It also failed to hold at the new highs so that's a failed breakout for now. Like the S&P 500, it could need a right shoulder consolidation before moving any further. There's 12 days of trading left this year and I feel good about this ending the year strongly, but the next few days could be a test of that resolve. Bond Yields probably need to stabilize or fall to help out this chart.
ACWX (I-fund) pulled back on Friday and that's a failed breakout for now, but it does remain in its narrow bullish channel, or F-flag.
BND (bonds / F-fund) broke down on Friday after the post-Fed rally earlier in the week. It closed back below the support line and the 50-day EMA so the bears are trying to take control of bonds as yields creep higher.
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 pulled back on Friday after Broadcom repeated Oracle's earnings troubles, and large cap tech led the market lower as concerns about an AI bubble persist. Yields and the dollar were up adding to the pressure on small caps, and prices in general. The loss took the C-fund into the red for the month while the S and I-funds remain firmly positive, but could be vulnerable if yields and the dollar keep rising.
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First it was Oracle and stocks sold off early on Thursday after their disappointing earnings, but the indices shook that off and the market rallied into the close. The next day Broadcom had a similar fate and stocks sold off on Friday morning, but this time they didn't come back.
The charts still look fine for now and I would be surprised if any early weakness this week does not get bought rather quickly. Many fund managers have lagged the resilient market index returns and they are not likely to let a year end rally go unattended. Also, most fund managers are heavy into the Mag 7 type of big tech stocks and their recent underperformance could push more money into what is working.
Here is the Big Tech ETF MAGS, and you can see that it has that lower high forming after a lower low in November. That is actually a potential bull flag, but that means it could still come down to test the bottom of that flag again, if it does not start moving back up soon. However, bull flags do tend to eventually break to the upside. The other possibility is that it is a bearish head and shoulders. Let's see how it develops.
Compare that to the charts of some early year laggards like the Transportation Index and the Russell 2000 small caps.
These are clearly working, and the question is whether fund mangers want to get onboard these high flyers in lieu of big tech, to help pad their 2025 returns for their year end reports. Of course the average investor is seeing this as well, and will have a decision to make whether to stick with the struggling bigger names, or move over to these outperforming sectors that have caught fire.
The S&P 500 (C-fund) chart looks good. It took a hit from Oracle and Broadcom but for now I would call this part of the double top pullback and a right shoulder of an inverted head and shoulders pattern potentially forming. These also tend to eventually break to the upside, but if it doesn't make an immediate run back toward the recent highs, it could just be some temporary churning inside the right shoulder, which wouldn't be bearish unless support levels start breaking down.
The 10-year Treasury Yield popped higher again, retesting that 200-day average and closing at its highest level since early September. After the breakout above that red pennant formation, the yield has successfully tested that line on a pullback last week, as well as the 50-day EMA, and both held as support.
The dollar was up but looked to be merely trying to fill in the open gap it created with Thursday's gap down. It has fallen below the 50-day average as well as the neckline of a head and shoulders pattern, which suggests it could go lower, although the 200-day EMA may try to hold as support.
The seasonality calendar is more favorable to the bulls this time of year, but you can see that we're still in the mid-December lull for stocks, and the Santa Claus rally doesn't officially begin until the 21st.
Source: sentimentrader.com
Those are tendencies of course but because the stock market has had such a solid year, the Santa Claus rally tends to be more likely. We've had some poor Decembers over the year but they tend to come during years where we see more tax selling in mid-to-late December.
The crypto-currencies have been getting clobbered in recent weeks and that may cause some tax selling there, which could negatively impact the the stock market. But once we get passed the 20th of the month, that tends to subside.
We will get the October and November monthly jobs data on Tuesday of this week. It's old data so while it could have a short-term impact on trading, the market has pretty much priced in the situation. Estimates for the October report are a gain of 55,000 jobs, and November's estimate is +25,000. Not great, but not surprising at this point, and it's also fodder for rates to remain low.
The DWCPF Index (S-Fund) hit a wall of resistance at the bottom of the old trading channel. It also failed to hold at the new highs so that's a failed breakout for now. Like the S&P 500, it could need a right shoulder consolidation before moving any further. There's 12 days of trading left this year and I feel good about this ending the year strongly, but the next few days could be a test of that resolve. Bond Yields probably need to stabilize or fall to help out this chart.
ACWX (I-fund) pulled back on Friday and that's a failed breakout for now, but it does remain in its narrow bullish channel, or F-flag.
BND (bonds / F-fund) broke down on Friday after the post-Fed rally earlier in the week. It closed back below the support line and the 50-day EMA so the bears are trying to take control of bonds as yields creep higher.
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.
