Stocks opened higher and closed with decent gains on Monday, although we did see some late selling again, causing some indices to close at their lows of the day. Small caps came back to outperform yesterday, and the I-fund had a solid day and it's been rare that the C-fund lagged those two. The Dow did well gaining nearly 300-points, but again well off the highs. Oil dropped sharply and yields were up.
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Monday was interesting in that we saw solid gains on the day but there was another weak close with the S&P 500 and Nasdaq closing well off the highs and actually at the lows of the day. That can be considered a bearish trend as it has been happening for about a week.
However, look at the breadth of yesterday's modest rally as advancing stocks outnumbered declining stocks by over 2 to1, and trading volume was even more lopsided on the advancer's side. That was mostly thanks to the smaller companies as the S-fund and the Russell 2000 Index held up and both closed near the highs of the day.
The 10-year Treasury Yield continues to rally and it peaked yesterday at a prior high in mid-July. That could mean we'll see some kind of a double top pullback, but the momentum is certainly still on the upside, so we'll just have to see how it reacts. That 4.3% area is above where I thought stocks might find some headwinds, but not yesterday. With the stock market continuing to move higher, I wonder what it will do if yields do actually pull back? It could be another wind at its back.
Typically oil and yields move in the same direction. Not day for day, but the trends tend to trigger off of the same data. That is, strong economic data will send yields higher, and it will send oil up as well as demand increases. Yesterday's sell off in oil was geopolitically driven, but it's interesting that this is now testing recent lows while the 10-year yield is trading near a 3-month high.
It's going to be a busy week with Mag 7 earnings coming in. Alphabet (GOOG) reports today after the closing bell, and Microsoft and Meta report tomorrow. Apple and Amazon report later in the week. We also get the PCE Prices inflation report on Thursday, and if that's not enough we get the October jobs report on Friday. I don't know how they know Octobers numbers so quickly, but it may tell us why the numbers get revised so often.
It's also the last jobs report before the election, so get ready for more rocking and rolling. If you recall last month's report beat estimates by over 100,000. In Friday's commentary I had a chart showing that full time employment growth is moving down to a level not seen since COVID and other prior recession, so let's say it's confusing. This month's report is expected to be about 125,000, or about half of last month's.
Admin Note: The forum has a new address / URL of forum.tsptalk.com. It's a big change and it may take some getting used to, but it is the latest and greatest forum software from what I can tell.
As for the website's new servers, the move was completed this past weekend. It should not impact anything on your end but we know with change comes unexpected results so if you see any issues we'd appreciate an email pointing to the error condition. Please send the email to support at our website address -- don't want the bots to see the email address.
The SPY (S&P 500 / C-fund) rallied, although it was on the lackluster side with the index closing at the lows of the day. So far the 20-day EMA is holding, which itself is a good definition of a bull market. It's moving sideways heading into the Mag 7 earnings and if big tech doesn't come through this week, that could shake things up, but I prefer nervous action heading into earnings rather than a big rally that could get sold, i.e., sell the rumor, buy the news? We'll see.
The DWCPF (S-fund) led with a solid gain of over 1.2% and it did that despite the push higher in yields. That's pretty impressive, and the chart holding at the prior September highs is classic bull market action. Again, big tech could change that, but this chart is starting in the lower left hand corner and ending near the top right and unless this makes a lower high and rolls over, then the bull have the edge. Tough resistance is sitting near 2225 so the reaction off of that level, if it can get there this week, will be telling.
The I-fund: The EFA tracking ETF was up 0.80% yesterday and the "ex USA ex China ex Hong Kong Index" was up 0.29%. My guess is the I-fund price, once posted, will be closer to 0.70%. You can see the TSP's eventual final daily price and return posted on our site each evening.
Just when you think yields won't, or shouldn't, go any higher, they do, and BND (Bonds / F-fund) is taking the brunt of it. It has almost filled that lower gap. Check out the support on the longer term chart below.
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.
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
Monday was interesting in that we saw solid gains on the day but there was another weak close with the S&P 500 and Nasdaq closing well off the highs and actually at the lows of the day. That can be considered a bearish trend as it has been happening for about a week.
However, look at the breadth of yesterday's modest rally as advancing stocks outnumbered declining stocks by over 2 to1, and trading volume was even more lopsided on the advancer's side. That was mostly thanks to the smaller companies as the S-fund and the Russell 2000 Index held up and both closed near the highs of the day.
The 10-year Treasury Yield continues to rally and it peaked yesterday at a prior high in mid-July. That could mean we'll see some kind of a double top pullback, but the momentum is certainly still on the upside, so we'll just have to see how it reacts. That 4.3% area is above where I thought stocks might find some headwinds, but not yesterday. With the stock market continuing to move higher, I wonder what it will do if yields do actually pull back? It could be another wind at its back.
Typically oil and yields move in the same direction. Not day for day, but the trends tend to trigger off of the same data. That is, strong economic data will send yields higher, and it will send oil up as well as demand increases. Yesterday's sell off in oil was geopolitically driven, but it's interesting that this is now testing recent lows while the 10-year yield is trading near a 3-month high.
It's going to be a busy week with Mag 7 earnings coming in. Alphabet (GOOG) reports today after the closing bell, and Microsoft and Meta report tomorrow. Apple and Amazon report later in the week. We also get the PCE Prices inflation report on Thursday, and if that's not enough we get the October jobs report on Friday. I don't know how they know Octobers numbers so quickly, but it may tell us why the numbers get revised so often.
It's also the last jobs report before the election, so get ready for more rocking and rolling. If you recall last month's report beat estimates by over 100,000. In Friday's commentary I had a chart showing that full time employment growth is moving down to a level not seen since COVID and other prior recession, so let's say it's confusing. This month's report is expected to be about 125,000, or about half of last month's.
Admin Note: The forum has a new address / URL of forum.tsptalk.com. It's a big change and it may take some getting used to, but it is the latest and greatest forum software from what I can tell.
As for the website's new servers, the move was completed this past weekend. It should not impact anything on your end but we know with change comes unexpected results so if you see any issues we'd appreciate an email pointing to the error condition. Please send the email to support at our website address -- don't want the bots to see the email address.
The SPY (S&P 500 / C-fund) rallied, although it was on the lackluster side with the index closing at the lows of the day. So far the 20-day EMA is holding, which itself is a good definition of a bull market. It's moving sideways heading into the Mag 7 earnings and if big tech doesn't come through this week, that could shake things up, but I prefer nervous action heading into earnings rather than a big rally that could get sold, i.e., sell the rumor, buy the news? We'll see.
The DWCPF (S-fund) led with a solid gain of over 1.2% and it did that despite the push higher in yields. That's pretty impressive, and the chart holding at the prior September highs is classic bull market action. Again, big tech could change that, but this chart is starting in the lower left hand corner and ending near the top right and unless this makes a lower high and rolls over, then the bull have the edge. Tough resistance is sitting near 2225 so the reaction off of that level, if it can get there this week, will be telling.
The I-fund: The EFA tracking ETF was up 0.80% yesterday and the "ex USA ex China ex Hong Kong Index" was up 0.29%. My guess is the I-fund price, once posted, will be closer to 0.70%. You can see the TSP's eventual final daily price and return posted on our site each evening.
Just when you think yields won't, or shouldn't, go any higher, they do, and BND (Bonds / F-fund) is taking the brunt of it. It has almost filled that lower gap. Check out the support on the longer term chart below.
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.
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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