Stocks were cruising along nicely on Friday as the Dow and S&P 500 were flirting with the all-time highs, but once again the market got blindsided by another tariff announcement in the afternoon. Maybe this one wasn't a blindsided move, after all - fool me once... Yields and the dollar reversed higher while stocks rolled over and turn a big gain into losses which may or may not roll over into Monday - the futures show that it very likely will. We did see some negative outside reversal days on the charts, which is a warning sign.
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The market was blindsided by the DeepSeek news last week, and then we got the afternoon tariff tanks on both Thursday and Friday, so it has been tough to navigate through what has been a fairly strong market over the last few months, but it has started to get sprinkled with moments of panic. Are investors just looking for a reason to sell, or are the tariffs really a game changer for the bull market?
I went back to 2018, the last time tariff talk was thrown at us, and I remember very well being blindsided by it.
According to wikipedia:
"In January 2018, Trump imposed tariffs on solar panels and washing machines of 30–50%. In March 2018, he imposed tariffs on steel (25%) and aluminum (10%) from most countries, which, according to Morgan Stanley, covered an estimated 4.1% of U.S. imports. In June 2018, this was extended to the European Union, Canada, and Mexico. The Trump administration separately set and escalated tariffs on goods imported from China, leading to a trade war.
"The tariffs angered trading partners, who implemented retaliatory tariffs on U.S. goods. In June 2018, India planned to recoup trade penalties of $241 million on $1.2 billion worth of Indian steel and aluminum, but attempted talks delayed these until June 2019 when India imposed retaliatory tariffs on $240 million worth of U.S. goods. Canada imposed matching retaliatory tariffs on July 1, 2018. China implemented retaliatory tariffs equivalent to the $34 billion tariff imposed on it by the U.S."
Source: https://en.wikipedia.org/wiki/First_Trump_tariffs
Here's a quote from the Wall Street Journal on Friday, "Trump has said the tariffs will take effect if the countries don’t take steps to stop migration and drug trafficking over U.S. borders."
This implies that something could change, and it could happen overnight, and that's the volatility effect that President Trump brings to the table.
As I have said before, this can be frustrating when we're blindsided, but it can also set up opportunities as volatility can do. It can also whipsaw us causing investors to panic sell at the wrong time, or buy an explosive news headline that reverses in the days following.
Here's the 4-year chart of Trump's first term, from the day he won the presidency in 2016, to his last day in 2020. It was a nice trajectory - bottom left to top right, but it wasn't without drama. Some of the volatility was self inflicted, like the tariffs, and others were [fill in the blank] in the case of COVID.
In my Plus report on Friday I mentioned that buy and holders may just want to look away and only check in quarterly or the end of the year to avoid the anxiety of possible wide swings. Or we can assume these swings are inevitable and try to play them accordingly.
Admittedly 2020, the COVID year - was a terrible year for my TSP timing compared to the market averages, so it is not as easy as I make it sound. I was whipsawed badly a couple of times during the COVID dramatics. I bought the dips way too early after the initial decline, and then sold the rallies too soon after the bottom was in, which turned out to be a huge "V" bottom. And of course having just two IFTs made it tough as well during the wild swings. Do you remember the daily 1000+ point moves in the Dow back then? Wow, it was crazy.
I'm not saying that's what's going to happen again. The stock market will most likely be fine in the end, but volatility can be tough, or profitable, but the trick - and this is easier said than done - is to try to keep emotions out of it as much as possible. We happen to have a president who is the early stages of implementing changes almost every day, and this is in contrast to the prior president who basically stayed out of the spotlight. It's a different approach, and it doesn't matter what you're into. We all have to deal with it as far as the stock market goes. It could be a curse or an open opportunity. It could be very frustrating, exciting, draining, or beneficial, depending on how we deal with it.
Alphabet (GOOG) will report earnings after the bell on Tuesday, and Amazon reports on Thursday. Nvidia won't wrap up the Magnificent 7 stocks earnings reports until they report on February 25. The January jobs report comes out on Friday.
The January TSP Talk AutoTracker winners have been posted in the forum. Congratulations to MRJ and David for their gains of 7.47% and 6.46% gains in the month respectively. Also, our Intrepid Timer service came in 3rd with a gain of 6.32% to get him, and anyone who may have mimicked those trades, off to great start in 2025. The S-fund led the TSP funds with a gain of 4.99% in January. Get in on the action - it's free!
The S&P 500 (C-fund) was on its way to testing the all time high but it looks like the double top may try to turn into a triple top. The futures are indicating a probable breakdown below that rising support line, and at least a test of the 50-day EMA. You can't always trust Monday morning gaps as they often get filled quickly, but we may need a change in the news flow to get that today.
DWCPF (S-fund) was floundering at the 2400 area for a couple of weeks and it may need some help surviving as it looks like a test of the 50-day EMA may be in the works, and with the open gap a little further down, it could be next - that is if the dip buyers don't show up quickly.
ACWX (the I-fund tracking index) was down 1.1% on Friday and the I-fund was given a loss of 0.68% so there may be some paybacks due today. It was an ugly day but the chart filled in an open gap with the loss. We'll see, if the gap near 53 can survive a weak Monday.
BND (bonds / F-fund) was down modestly on Friday. This chart has been holding up well, and I see in the overnight trading that yields are down so traders are buying bonds. Is this the week this break above the descending channel as stock investors fun for safety?
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.
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The market was blindsided by the DeepSeek news last week, and then we got the afternoon tariff tanks on both Thursday and Friday, so it has been tough to navigate through what has been a fairly strong market over the last few months, but it has started to get sprinkled with moments of panic. Are investors just looking for a reason to sell, or are the tariffs really a game changer for the bull market?
I went back to 2018, the last time tariff talk was thrown at us, and I remember very well being blindsided by it.
According to wikipedia:
"In January 2018, Trump imposed tariffs on solar panels and washing machines of 30–50%. In March 2018, he imposed tariffs on steel (25%) and aluminum (10%) from most countries, which, according to Morgan Stanley, covered an estimated 4.1% of U.S. imports. In June 2018, this was extended to the European Union, Canada, and Mexico. The Trump administration separately set and escalated tariffs on goods imported from China, leading to a trade war.
"The tariffs angered trading partners, who implemented retaliatory tariffs on U.S. goods. In June 2018, India planned to recoup trade penalties of $241 million on $1.2 billion worth of Indian steel and aluminum, but attempted talks delayed these until June 2019 when India imposed retaliatory tariffs on $240 million worth of U.S. goods. Canada imposed matching retaliatory tariffs on July 1, 2018. China implemented retaliatory tariffs equivalent to the $34 billion tariff imposed on it by the U.S."
Source: https://en.wikipedia.org/wiki/First_Trump_tariffs
Here's a quote from the Wall Street Journal on Friday, "Trump has said the tariffs will take effect if the countries don’t take steps to stop migration and drug trafficking over U.S. borders."
This implies that something could change, and it could happen overnight, and that's the volatility effect that President Trump brings to the table.
As I have said before, this can be frustrating when we're blindsided, but it can also set up opportunities as volatility can do. It can also whipsaw us causing investors to panic sell at the wrong time, or buy an explosive news headline that reverses in the days following.
Here's the 4-year chart of Trump's first term, from the day he won the presidency in 2016, to his last day in 2020. It was a nice trajectory - bottom left to top right, but it wasn't without drama. Some of the volatility was self inflicted, like the tariffs, and others were [fill in the blank] in the case of COVID.
In my Plus report on Friday I mentioned that buy and holders may just want to look away and only check in quarterly or the end of the year to avoid the anxiety of possible wide swings. Or we can assume these swings are inevitable and try to play them accordingly.
Admittedly 2020, the COVID year - was a terrible year for my TSP timing compared to the market averages, so it is not as easy as I make it sound. I was whipsawed badly a couple of times during the COVID dramatics. I bought the dips way too early after the initial decline, and then sold the rallies too soon after the bottom was in, which turned out to be a huge "V" bottom. And of course having just two IFTs made it tough as well during the wild swings. Do you remember the daily 1000+ point moves in the Dow back then? Wow, it was crazy.
I'm not saying that's what's going to happen again. The stock market will most likely be fine in the end, but volatility can be tough, or profitable, but the trick - and this is easier said than done - is to try to keep emotions out of it as much as possible. We happen to have a president who is the early stages of implementing changes almost every day, and this is in contrast to the prior president who basically stayed out of the spotlight. It's a different approach, and it doesn't matter what you're into. We all have to deal with it as far as the stock market goes. It could be a curse or an open opportunity. It could be very frustrating, exciting, draining, or beneficial, depending on how we deal with it.
Alphabet (GOOG) will report earnings after the bell on Tuesday, and Amazon reports on Thursday. Nvidia won't wrap up the Magnificent 7 stocks earnings reports until they report on February 25. The January jobs report comes out on Friday.
The January TSP Talk AutoTracker winners have been posted in the forum. Congratulations to MRJ and David for their gains of 7.47% and 6.46% gains in the month respectively. Also, our Intrepid Timer service came in 3rd with a gain of 6.32% to get him, and anyone who may have mimicked those trades, off to great start in 2025. The S-fund led the TSP funds with a gain of 4.99% in January. Get in on the action - it's free!
The S&P 500 (C-fund) was on its way to testing the all time high but it looks like the double top may try to turn into a triple top. The futures are indicating a probable breakdown below that rising support line, and at least a test of the 50-day EMA. You can't always trust Monday morning gaps as they often get filled quickly, but we may need a change in the news flow to get that today.
DWCPF (S-fund) was floundering at the 2400 area for a couple of weeks and it may need some help surviving as it looks like a test of the 50-day EMA may be in the works, and with the open gap a little further down, it could be next - that is if the dip buyers don't show up quickly.
ACWX (the I-fund tracking index) was down 1.1% on Friday and the I-fund was given a loss of 0.68% so there may be some paybacks due today. It was an ugly day but the chart filled in an open gap with the loss. We'll see, if the gap near 53 can survive a weak Monday.
BND (bonds / F-fund) was down modestly on Friday. This chart has been holding up well, and I see in the overnight trading that yields are down so traders are buying bonds. Is this the week this break above the descending channel as stock investors fun for safety?
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.
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