The stocks market surprised almost everyone yesterday with a big Election Day rally. We had no results, no clarity, and very few catalysts, but the major stock market indices all gained over 1% on the day. Small caps led on the upside as the S-fund gained 1.7%. Bond yields were up early after a strong ISM Services report, but that flipped over after the 10-year T-note yield tested the recent highs.
Stocks tend to do well regardless, and surprisingly it doesn't matter a whole lot to the market who wins, perhaps after a some short-term volatility. Money managers are prepared for either outcome, and once we get the clarity, the approach to investing is set for a couple of years - whether you're investing in oil and gas or in healthcare, etc., as an example.
If you recall in 2020 the counting stopped with Trump leading, and then the next morning when the counting resumed, Biden was winning so I hate to speculate on any outcome. But the bottom line is that stocks rallied after Trump won in 2016, and they rallied after Biden won in 2020.
I remember very well election night in 2016 when the overnight futures were going crazy as the results trickled in. The Dow futures were going up and down 1000 points, or about 5% at the time, on each new state that reported results. But as you can see, it was all noise and perhaps today's close will tell the true story - if we don't have total chaos ensuing. Perhaps a dead heat race or two in congress, or even the presidency, could cause some short-term uncertainty, but generally the bias is bullish going forward.
Once investors know who is going to be in the White House and congress, it can go on with business as usually, although one issue that could perhaps sway the market is that if Harris wins, the Trump tax cuts are likely going to expire and the market could react to that.
The 10-year Treasury Yield was down yesterday after testing and backing off the from the recent highs again. Strong economic data sent it up early, but it ran out of steam as stocks started to rally, and don't forget that there is a near 100% probability that the Fed will be cutting interest rates tomorrow.
The Federal Reserve FOMC meeting starts today and tomorrow we will get the decision on interest rates and their policy statement typically at 2 PM ET. There was a slight move up in the chances of no rate cut tomorrow, but otherwise it's basically a done deal that we'll see a 0.25% cut. However, any surprises from the Fed and the stock market might go bananas. What they have to say about quantitative tightening could move the market.
OK, don't want to speculate too much and you will all see how the election unfolds before I update these commentary again, but just know that history suggests the stock market should be fine regardless of the outcome, although if anything anomalous happens, then there's no guarantees.
Just an early head's up that Monday is Veteran's Day and the TSP will be closed that day.
The S&P 500 (C-fund) bounced off that 50-day EMA again, and it is reaching up toward that open gap created last Thursday after Microsoft and Meta disappointed with their earnings reports. The election results could make any chart patterns moot, but currently it suggests another test of the highs is coming.
The DWCPF (S-fund) led yesterday as investors decided to get giddy and aggressive heading into the big unknown. It actually closed very close to the 2024 closing highs. There were 3 slightly higher closes in mid-October. The September highs near 2180 have held repeatedly, and the bulls would like to put that area behind them after trading just very close to that level for about 8 weeks, and actually all the way back to late July when it flirted with 2175 for a day.
According to the TSP website, "I Fund benchmark index change complete — The transition of the I Fund benchmark to the MSCI All Country World Investable Market Index ex USA ex China ex Hong Kong Index (MSCI ACWI IMI ex USA ex China ex Hong Kong Index) is complete."
The ETF "ACWI" seems to be what the I-fund will be tracking, however we know many of these countries' markets trade overnight and ACWI trades during US trading hours so the prices may not always match - similar to what experiences with ETF.
Yesterday ACWI gained 1.17% so we'll just have to see what the TSP gives the I-fund. You can see that update by about 9:15 PM ET here: https://www.tsptalk.com/tsp_share_prices.php
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Update: Actual was +0.86%, so that's not encouraging.
BND (Bonds / F-fund) had a nice gain yesterday as yields rolled over after a positive open. The support continues to hold, as does the descending trading channel, and one of those is going to have to give.
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.html
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.
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First off, I am writing this after the stock market close on Tuesday, Election Day, all of the polls are still open and I have no idea who won, who was winning, or anything. We could get some early volatility on Wednesday depending on what happened on Tuesday night. Stocks tend to do well regardless, and surprisingly it doesn't matter a whole lot to the market who wins, perhaps after a some short-term volatility. Money managers are prepared for either outcome, and once we get the clarity, the approach to investing is set for a couple of years - whether you're investing in oil and gas or in healthcare, etc., as an example.
If you recall in 2020 the counting stopped with Trump leading, and then the next morning when the counting resumed, Biden was winning so I hate to speculate on any outcome. But the bottom line is that stocks rallied after Trump won in 2016, and they rallied after Biden won in 2020.
I remember very well election night in 2016 when the overnight futures were going crazy as the results trickled in. The Dow futures were going up and down 1000 points, or about 5% at the time, on each new state that reported results. But as you can see, it was all noise and perhaps today's close will tell the true story - if we don't have total chaos ensuing. Perhaps a dead heat race or two in congress, or even the presidency, could cause some short-term uncertainty, but generally the bias is bullish going forward.
Once investors know who is going to be in the White House and congress, it can go on with business as usually, although one issue that could perhaps sway the market is that if Harris wins, the Trump tax cuts are likely going to expire and the market could react to that.
The 10-year Treasury Yield was down yesterday after testing and backing off the from the recent highs again. Strong economic data sent it up early, but it ran out of steam as stocks started to rally, and don't forget that there is a near 100% probability that the Fed will be cutting interest rates tomorrow.
The Federal Reserve FOMC meeting starts today and tomorrow we will get the decision on interest rates and their policy statement typically at 2 PM ET. There was a slight move up in the chances of no rate cut tomorrow, but otherwise it's basically a done deal that we'll see a 0.25% cut. However, any surprises from the Fed and the stock market might go bananas. What they have to say about quantitative tightening could move the market.
OK, don't want to speculate too much and you will all see how the election unfolds before I update these commentary again, but just know that history suggests the stock market should be fine regardless of the outcome, although if anything anomalous happens, then there's no guarantees.
Just an early head's up that Monday is Veteran's Day and the TSP will be closed that day.
The S&P 500 (C-fund) bounced off that 50-day EMA again, and it is reaching up toward that open gap created last Thursday after Microsoft and Meta disappointed with their earnings reports. The election results could make any chart patterns moot, but currently it suggests another test of the highs is coming.
The DWCPF (S-fund) led yesterday as investors decided to get giddy and aggressive heading into the big unknown. It actually closed very close to the 2024 closing highs. There were 3 slightly higher closes in mid-October. The September highs near 2180 have held repeatedly, and the bulls would like to put that area behind them after trading just very close to that level for about 8 weeks, and actually all the way back to late July when it flirted with 2175 for a day.
According to the TSP website, "I Fund benchmark index change complete — The transition of the I Fund benchmark to the MSCI All Country World Investable Market Index ex USA ex China ex Hong Kong Index (MSCI ACWI IMI ex USA ex China ex Hong Kong Index) is complete."
The ETF "ACWI" seems to be what the I-fund will be tracking, however we know many of these countries' markets trade overnight and ACWI trades during US trading hours so the prices may not always match - similar to what experiences with ETF.
Yesterday ACWI gained 1.17% so we'll just have to see what the TSP gives the I-fund. You can see that update by about 9:15 PM ET here: https://www.tsptalk.com/tsp_share_prices.php
HTML clipboard
Update: Actual was +0.86%, so that's not encouraging.
BND (Bonds / F-fund) had a nice gain yesterday as yields rolled over after a positive open. The support continues to hold, as does the descending trading channel, and one of those is going to have to give.
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.html
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.
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