12/05/25
Another ho hum kind of day for stocks, similar to Wednesday, with the indices closing near flat, and small caps outperforming the large caps. This is good action despite yields climbing after a better than expected jobless claims report could have threatened a rate cut, but instead investors held steady and even did some buying after a couple of intraday pullbacks.
It wasn't quite enough to sway investor's expectations of an interest rate cut next week, which is still at an 87% probability, but the dramatic decline in the weekly jobless claims was enough to send yields higher and those questioning the strength of the economy may be rethinking it. Or was this an anomaly after the sporadic post-shutdown economic data? 191,000 was the second lowest initial weekly jobless claims number since 1969.
The Yield on the 10-year Treasury rallied back toward the purple moving average which has held as resistance for months, but this is an odd chart pattern. It looks like a bunch of heads and shoulders, but which way does it want to go? I would guess higher but as long as it is below that purple average the downside has the advantage.
The dollar opened lower on the data but reversed after successfully retesting its 50-day moving average, and now it may be looking to fill that open gap from Wednesday. This could be where it holds, like it did on October 1st, but it also fell below a support line earlier this week, so that created some resistance. So, like yields, there's a battle going on for direction here.
The S&P 500 (C-fund) is still digesting the big gains off the November lows. Is that a right shoulder of an inverted head and shoulders pattern? It doesn't look like a flat top anymore, as I suggested yesterday, but it could be an F-flag. F-flags are very bullish - until they're not. They tend to break down eventually, but the upside can grind higher for an uncomfortably long time while you're waiting for the breakdown. Could it go through the end of the year, or will we see a full right shoulder pullback sooner than later?
The Dow Transportation Index has now been up for nine straight trading days after lagging the major US indices almost all year. This is a good sign for the economy, and it could be telling us why yields might be going higher.
The market is getting more focused on the President's nominee for the next Chair of the Federal Reserve. Will it be a dovish Trump ally that will be focused on lowering rates, or a more Wall Street friendly face that could be more measured? The decision could come any day, or even as late as January.
We will get the PCE Prices report this morning. This could be interesting if it doesn't hit the mark, as stronger economic data and possible inflation could impact the Fed's outlook on rates.
The DWCPF Index (S-Fund) led the way again yesterday and the chart couldn't look better. There is always a possibility of a double top pullback as this near the October highs. The question would be, how deep of a right shoulder might we see, if any? I would say drop dead support would be near 2470. Below that and the bears would jump back into the picture.
ACWX (I-fund) was up again yesterday despite a rally in the dollar, and the gain was enough to push it back into the ascending channel. That's another feather in the bulls' cap but as I always say, when there's an open gap below, we have to keep looking over our shoulders as they are always trying to get filled.
BND (bonds / F-fund) were down as yields were on the rise on the stronger than expected employment data. It is still above support near 74.20, but today's PCE could make or break that level. And the 50-day average near 74.0 could always get tested again. If the data is light (less inflationary), this might spike back toward the highs.
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
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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.
Another ho hum kind of day for stocks, similar to Wednesday, with the indices closing near flat, and small caps outperforming the large caps. This is good action despite yields climbing after a better than expected jobless claims report could have threatened a rate cut, but instead investors held steady and even did some buying after a couple of intraday pullbacks.
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It wasn't quite enough to sway investor's expectations of an interest rate cut next week, which is still at an 87% probability, but the dramatic decline in the weekly jobless claims was enough to send yields higher and those questioning the strength of the economy may be rethinking it. Or was this an anomaly after the sporadic post-shutdown economic data? 191,000 was the second lowest initial weekly jobless claims number since 1969.
The Yield on the 10-year Treasury rallied back toward the purple moving average which has held as resistance for months, but this is an odd chart pattern. It looks like a bunch of heads and shoulders, but which way does it want to go? I would guess higher but as long as it is below that purple average the downside has the advantage.
The dollar opened lower on the data but reversed after successfully retesting its 50-day moving average, and now it may be looking to fill that open gap from Wednesday. This could be where it holds, like it did on October 1st, but it also fell below a support line earlier this week, so that created some resistance. So, like yields, there's a battle going on for direction here.
The S&P 500 (C-fund) is still digesting the big gains off the November lows. Is that a right shoulder of an inverted head and shoulders pattern? It doesn't look like a flat top anymore, as I suggested yesterday, but it could be an F-flag. F-flags are very bullish - until they're not. They tend to break down eventually, but the upside can grind higher for an uncomfortably long time while you're waiting for the breakdown. Could it go through the end of the year, or will we see a full right shoulder pullback sooner than later?
The Dow Transportation Index has now been up for nine straight trading days after lagging the major US indices almost all year. This is a good sign for the economy, and it could be telling us why yields might be going higher.
The market is getting more focused on the President's nominee for the next Chair of the Federal Reserve. Will it be a dovish Trump ally that will be focused on lowering rates, or a more Wall Street friendly face that could be more measured? The decision could come any day, or even as late as January.
We will get the PCE Prices report this morning. This could be interesting if it doesn't hit the mark, as stronger economic data and possible inflation could impact the Fed's outlook on rates.
The DWCPF Index (S-Fund) led the way again yesterday and the chart couldn't look better. There is always a possibility of a double top pullback as this near the October highs. The question would be, how deep of a right shoulder might we see, if any? I would say drop dead support would be near 2470. Below that and the bears would jump back into the picture.
ACWX (I-fund) was up again yesterday despite a rally in the dollar, and the gain was enough to push it back into the ascending channel. That's another feather in the bulls' cap but as I always say, when there's an open gap below, we have to keep looking over our shoulders as they are always trying to get filled.
BND (bonds / F-fund) were down as yields were on the rise on the stronger than expected employment data. It is still above support near 74.20, but today's PCE could make or break that level. And the 50-day average near 74.0 could always get tested again. If the data is light (less inflationary), this might spike back toward the highs.
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.
