08/11/25
Friday was another one of those days where big tech dominated the action and we saw healthy gains in the big three market indices. Meanwhile the average stock was flat to lower on the day with the small caps of the S-fund and the Transports both closing with a loss on Friday. It was a good week for stocks overall last week. The I-fund has come back to life in August after its precipitous drop off in late July, however small caps remain down for the month. Bonds took a hit on Friday with yields moving higher.
(The most current commentary is always posted here: www.tsptalk.com/comments.php)
This chart from @MichaelAArouet on X.com shows the continued leadership of the largest companies in the S&P 500, basically the Magnificent 7 plus a few others, and the growth of their earnings versus the growth of the other 490 companies in the index.
Source: https://x.com/MichaelAArouet/status/1953704318151905325?t=RNMvWzDmNFpWZjC74RW4yg&s=03
Fortunately most of these top 10 companies have reported second quarter earnings and we got by them without incident, although Amazon caused a stir on August 1st, but it has been climbing back since.
The question is, should we feel comfort that these large companies are continuing to pad the three major stock market indices, or concerned that the larger majority of the stock market is doing just OK.
If things stay the same, this would be the fifth straight year that the S&P 500 outperforms the S-fund. That would be the first such streak since the S-fund started in 2001.
Meanwhile it's the I-fund stealing the show this year. The C-fund had outperformed the I-fund in 10 of the last 12 years before this year. However, the I-fund did out perform the C-fund for 6 straight years from 2002 until 2007, so this not unprecedented.
I am getting a little more bearish but I am also fully aware of the market's ability to melt-up the more people expect a pullback. August is not usually a month that we would see something like that happen, but there is this new phenomenon with bitcoin where bitcoin tends to lead the stock market by a month, and bitcoin exploded 15% in the first half of July. Is that what is about to happen in the stock market?
The S&P 500 (C-fund) is in the process of retracing the negative outside reversal (NOR) candlestick from July 31. I knew this was a possibility but the NOR's reputation as a warning sign may have caused me to become too defense, or was it just that I became defense too early, because the NOR is still part of the picture? I still have money in the stock funds but if the rally keeps going I may have to consider raising even more cash, which I didn't really want to do. This may be the make or break week as the S&P nears the top of that reversal candlestick. Will it be bitcoin to the rescue?
The weekly chart of the S&P 500 is currently creating a flat top look. Of course these can go either way. We saw one breakout in June, although that wasn't the cleanest of flat tops, but the flat top in February broke down like a stone in water. I suppose this week could create another test of the previous highs keeping the flat top going, or we'll get a big move in one direction or the other. Place your bets.
These types of charts are always floating around, but there have been a lot popping up recently. The S&P 500 valuation is now more expensive than it has ever been when comparing the price to sales ratio. The bear market of 2022 took the current extreme back toward normal levels, although still elevated. Either sales are going to have pick up quickly, or the S&P 500 will have to correct to bring this back to the normal levels.
Source X
Like the small caps, the Transportation Index has been failing at overhead resistance - in this case the 200-day average, and late last week it fell back below its 50-day average. That is 6 of the last 7 days that it closed below the 50-day average, and I see that as a problem.
This week we have some potential catalysts with the CPI report (Consumer Prices) coming out on Tuesday, and the PPI report (Wholesale Prices) being released on Wednesday. On Friday we'll get the Retail Sales data.
The DWCPF / S-fund was down on Friday, despite the healthy gains in the big three indices. It has been unable to recapture the old broken support lines, which have become resistance.
On Friday it also closed below the 20-day average for only the second time since April.
ACWX (I-fund) has taken charge again and it has been up for five straight days. Meanwhile the dollar (UUP) is helping by pulling back sharply from the late July peak.
BND (bonds / F-fund) was down sharply on Friday with yields moving up. It did close above some key support levels, but that open gap below 73.25 is still looming as a possible pullback target in the short-term.
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.
Friday was another one of those days where big tech dominated the action and we saw healthy gains in the big three market indices. Meanwhile the average stock was flat to lower on the day with the small caps of the S-fund and the Transports both closing with a loss on Friday. It was a good week for stocks overall last week. The I-fund has come back to life in August after its precipitous drop off in late July, however small caps remain down for the month. Bonds took a hit on Friday with yields moving higher.
(The most current commentary is always posted here: www.tsptalk.com/comments.php)
| Daily TSP Funds Return
More returns |
This chart from @MichaelAArouet on X.com shows the continued leadership of the largest companies in the S&P 500, basically the Magnificent 7 plus a few others, and the growth of their earnings versus the growth of the other 490 companies in the index.
Source: https://x.com/MichaelAArouet/status/1953704318151905325?t=RNMvWzDmNFpWZjC74RW4yg&s=03
Fortunately most of these top 10 companies have reported second quarter earnings and we got by them without incident, although Amazon caused a stir on August 1st, but it has been climbing back since.
The question is, should we feel comfort that these large companies are continuing to pad the three major stock market indices, or concerned that the larger majority of the stock market is doing just OK.
If things stay the same, this would be the fifth straight year that the S&P 500 outperforms the S-fund. That would be the first such streak since the S-fund started in 2001.
Meanwhile it's the I-fund stealing the show this year. The C-fund had outperformed the I-fund in 10 of the last 12 years before this year. However, the I-fund did out perform the C-fund for 6 straight years from 2002 until 2007, so this not unprecedented.
I am getting a little more bearish but I am also fully aware of the market's ability to melt-up the more people expect a pullback. August is not usually a month that we would see something like that happen, but there is this new phenomenon with bitcoin where bitcoin tends to lead the stock market by a month, and bitcoin exploded 15% in the first half of July. Is that what is about to happen in the stock market?
The S&P 500 (C-fund) is in the process of retracing the negative outside reversal (NOR) candlestick from July 31. I knew this was a possibility but the NOR's reputation as a warning sign may have caused me to become too defense, or was it just that I became defense too early, because the NOR is still part of the picture? I still have money in the stock funds but if the rally keeps going I may have to consider raising even more cash, which I didn't really want to do. This may be the make or break week as the S&P nears the top of that reversal candlestick. Will it be bitcoin to the rescue?
The weekly chart of the S&P 500 is currently creating a flat top look. Of course these can go either way. We saw one breakout in June, although that wasn't the cleanest of flat tops, but the flat top in February broke down like a stone in water. I suppose this week could create another test of the previous highs keeping the flat top going, or we'll get a big move in one direction or the other. Place your bets.
These types of charts are always floating around, but there have been a lot popping up recently. The S&P 500 valuation is now more expensive than it has ever been when comparing the price to sales ratio. The bear market of 2022 took the current extreme back toward normal levels, although still elevated. Either sales are going to have pick up quickly, or the S&P 500 will have to correct to bring this back to the normal levels.
Source X
Like the small caps, the Transportation Index has been failing at overhead resistance - in this case the 200-day average, and late last week it fell back below its 50-day average. That is 6 of the last 7 days that it closed below the 50-day average, and I see that as a problem.
This week we have some potential catalysts with the CPI report (Consumer Prices) coming out on Tuesday, and the PPI report (Wholesale Prices) being released on Wednesday. On Friday we'll get the Retail Sales data.
The DWCPF / S-fund was down on Friday, despite the healthy gains in the big three indices. It has been unable to recapture the old broken support lines, which have become resistance.
On Friday it also closed below the 20-day average for only the second time since April.
ACWX (I-fund) has taken charge again and it has been up for five straight days. Meanwhile the dollar (UUP) is helping by pulling back sharply from the late July peak.
BND (bonds / F-fund) was down sharply on Friday with yields moving up. It did close above some key support levels, but that open gap below 73.25 is still looming as a possible pullback target in the short-term.
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.
