Stocks sold off on Friday, closing near the lows of the day as the bears are trying to take momentum back after the early January rally. The jobs report came in much better than expected and that pushed yields and the dollar to new highs, and the stock market buckled. Bonds also fell and suddenly only the G-fund is positive for the year.
You can see the latest updated TSP share prices and returns, usually posted daily by 8:30 PM ET here: https://www.tsptalk.com/tsp_share_prices.php
The jobs report walloped estimates as the 256,000 jobs gained in December was about 100,000 more than expected, and the unemployment rate unexpectedly dipped to 4.1%. We know that they have a tendency to revise these reports downward, so was this positive news for the economy, or just a parting gift for Biden's final jobs report as president?
We'll never know for sure, but the stock market saw it as too hot and the selling started as soon as the opening bell rang as the odds of rate cuts in future Fed meetings has come down quite a bit. If the Fed does start considering raising interest rates we know Trump will have something to say about it, so there is something here for everyone and we could see the volatility in the market continue as the uncertainty brings out all kinds of possibilities.
I am optimistic with the set up we see for stocks fundamentally, but the charts still look nasty. Poking my head into various catalysts for the financial markets this weekend and I saw two things: Money supplies and liquidity are really favoring the stock market and higher prices in general. The bad news, it's that's also favoring inflation, which could mean higher interest rates, yields, and the cost of doing business.
We knew that yields had been going inexplicably higher for several months but as we often say, the bond market is a savvy group and if yields are moving, there's probably a good reason. Once again we see the 10-year Treasury Yield making new highs (bond prices and the F-fund making new lows) so is there any chance that this jobs report is the exclamation point for bonds -- i.e. sell the rumor, now buy the news? The action on Friday did fill in an old open gap from late 2023.
The bond market has also been looking at Trump's policies as inflationary, but again, in a week he gets sworn into office and we have to wonder if it has all been priced in already? After all BND (bonds / F-fund) peaked in September, right about when the polls started turning. So again, sell the rumor, buy the news in bonds?
That really is just a question, I'm not sure. The chart looks bad, but just remember the stock market, and even more so the bond market, are usually way ahead of us and the news headlines.
The weekly chart of the S&P 500 shows that we are still in an uptrend and currently just testing the 20-week moving average - something that has been holding on a weekly closing basis since the lows in 2023. Even the breakdown in the first week in August closed above that average. So a close below that line this week could be telling a more bearish story, but if it can hold, it may have been just another buy the dip opportunity.
So I have some hope that things can get better, but the charts are not on that page yet and always be leery of a stock market that is falling more than seems appropriate. It usually means something we don't know about yet is brewing.
Admin note: We are offering a discount on our annual subscriptions to new and current subscribers until Jan 18. You can sign up to a new service or add a year or two (in some cases) to your current subscription for 20% off the regular price (or 50% in some cases.) Use this link for more information: TSP Talk - Annual Subscription Sale
The S&P 500 (C-fund) lost 1.5% on Friday and that took it down to its lowest close since before the election. The 100-day EMA held on Friday, but the gap from the day after Election Day is still slightly open near 5780. The head and shoulders pattern is still looming, but as I mentioned a few times, these don't always break down when they form within an uptrend, so it is still possible that the neckline could hold. Unfortunately some of the the other market leading charts have already broken down.
DWCPF (S-fund) is one of those charts. It's not devastating yet, but that bear flag is trying to break. Technically it is still above that open gap from November, the peak in mid-October, and the neckline of a head and shoulders pattern. It's getting close, but this week's early action will be telling.
ACWX (the I-fund tracking index) was down 1.71% on Friday and the I-fund was given a loss of 1.60%. The strength in the dollar is helping break this chart as the bear flag did what a bear flag tends to do.
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.
| Daily TSP Funds Return
More returns |
You can see the latest updated TSP share prices and returns, usually posted daily by 8:30 PM ET here: https://www.tsptalk.com/tsp_share_prices.php
The jobs report walloped estimates as the 256,000 jobs gained in December was about 100,000 more than expected, and the unemployment rate unexpectedly dipped to 4.1%. We know that they have a tendency to revise these reports downward, so was this positive news for the economy, or just a parting gift for Biden's final jobs report as president?
We'll never know for sure, but the stock market saw it as too hot and the selling started as soon as the opening bell rang as the odds of rate cuts in future Fed meetings has come down quite a bit. If the Fed does start considering raising interest rates we know Trump will have something to say about it, so there is something here for everyone and we could see the volatility in the market continue as the uncertainty brings out all kinds of possibilities.
I am optimistic with the set up we see for stocks fundamentally, but the charts still look nasty. Poking my head into various catalysts for the financial markets this weekend and I saw two things: Money supplies and liquidity are really favoring the stock market and higher prices in general. The bad news, it's that's also favoring inflation, which could mean higher interest rates, yields, and the cost of doing business.
We knew that yields had been going inexplicably higher for several months but as we often say, the bond market is a savvy group and if yields are moving, there's probably a good reason. Once again we see the 10-year Treasury Yield making new highs (bond prices and the F-fund making new lows) so is there any chance that this jobs report is the exclamation point for bonds -- i.e. sell the rumor, now buy the news? The action on Friday did fill in an old open gap from late 2023.
The bond market has also been looking at Trump's policies as inflationary, but again, in a week he gets sworn into office and we have to wonder if it has all been priced in already? After all BND (bonds / F-fund) peaked in September, right about when the polls started turning. So again, sell the rumor, buy the news in bonds?
That really is just a question, I'm not sure. The chart looks bad, but just remember the stock market, and even more so the bond market, are usually way ahead of us and the news headlines.
The weekly chart of the S&P 500 shows that we are still in an uptrend and currently just testing the 20-week moving average - something that has been holding on a weekly closing basis since the lows in 2023. Even the breakdown in the first week in August closed above that average. So a close below that line this week could be telling a more bearish story, but if it can hold, it may have been just another buy the dip opportunity.
So I have some hope that things can get better, but the charts are not on that page yet and always be leery of a stock market that is falling more than seems appropriate. It usually means something we don't know about yet is brewing.
Admin note: We are offering a discount on our annual subscriptions to new and current subscribers until Jan 18. You can sign up to a new service or add a year or two (in some cases) to your current subscription for 20% off the regular price (or 50% in some cases.) Use this link for more information: TSP Talk - Annual Subscription Sale
The S&P 500 (C-fund) lost 1.5% on Friday and that took it down to its lowest close since before the election. The 100-day EMA held on Friday, but the gap from the day after Election Day is still slightly open near 5780. The head and shoulders pattern is still looming, but as I mentioned a few times, these don't always break down when they form within an uptrend, so it is still possible that the neckline could hold. Unfortunately some of the the other market leading charts have already broken down.
DWCPF (S-fund) is one of those charts. It's not devastating yet, but that bear flag is trying to break. Technically it is still above that open gap from November, the peak in mid-October, and the neckline of a head and shoulders pattern. It's getting close, but this week's early action will be telling.
ACWX (the I-fund tracking index) was down 1.71% on Friday and the I-fund was given a loss of 1.60%. The strength in the dollar is helping break this chart as the bear flag did what a bear flag tends to do.
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.
