Tariff talk got the market off on the wrong foot on Tuesday as yields and the dollar moved up and stocks opened lower. However, it didn't take long for dip buyers to show up again, but yesterday it was the large caps that outperformed the small caps, which was a change from recent activity. Whether it was more related to the tariffs or the dollar, or both, the I-fund lagged again.
Donald Trump isn't even the president yet but yesterday brought back memories of how much influence he can have on the stock market overnight with one comment. He said he would impose a 25% tariff on imports from Canada and Mexico as well as a 10% tariff on goods from China above any additional tariffs.
The overnight futures fell on that news but by the opening bell the stock market took it in stride and brushed it off. I don't know exactly how I feel about tariffs but I find it interesting that many who oppose tariffs because it could raise consumer prices on items being imported, are typically the same people who are in favor of corporations paying higher taxes, which has a similar effect of potentially raising prices. And vice versa, those who favor tariffs are against raising corporate taxes because it would pass the cost along to consumers. I guess my take would favor tariffs over higher corporate taxes since one promotes buying more American goods and taxing foreign companies over US companies. But again, I'm no expert on that.
Yesterday we saw a shift from the recent trend with large cap techs leading and the smaller, broader indices, lagged. On the NYSE there were two stocks down for each one up, and even the Nasdaq had a negative breadth ratio, but those large caps have a bigger influence on the S&P 500 and Nasdaq's return.
We still saw a solid number of new highs versus new lows yesterday.
The 10-year Treasury Yield was up but it only retraced a portion on Monday's loss, so it may have been the tariffs, or perhaps it was just doing some backing and filling of Monday's gap down. Today's PCE Prices inflation report will likely set a better tone for the direction.
The market leading Dow Transportation Index made a new closing high on Monday but it it also backed off a little yesterday. Like the S-fund chart in the bottom section, that open gap near 17,400 may get filled, but the one down by 16,600 may take a while - perhaps into next year, before it gets challenged.
I have been a little surprised that the investment community is not as exuberant as the recent rally in stocks might suggest it would be. We did see this CNN Fear & Greed Index move from Neutral to Greed territory in recent days, but when you see small caps up 12% in a month, the risky bitcoin trade hitting just short of 100K recently, plus we are heading straight into the strongest seasonal art of the year, yet we aren't near the Extreme Greed Zone yet, it may suggest that stocks have more room to climb up the wall of worry. These sentiment following indicators tend to be contrarian indicators, but only at extremes. It's when everyone is bullish that you have to really start being worried. IT doesn't look like we're there yet.
The market and TSP are closed on Thursday for Thanksgiving and then Friday there will be just a half day of trading, although that won't impact the TSP's 12 noon ET deadline for transactions. I will likely post a brief commentary on Friday.
Have a Happy Thanksgiving!
The S&P 500 (C-fund) closed at a new high on Wednesday and this continues to act well despite a possible double top resistance area. The PMO momentum indicator is back above its moving average so it's back on the buy side for that indicator, although more consolidation, like the handle of a cup and handle formation, could still form from here after that recent rally.
DWCPF (S-fund) pulled back modestly yesterday, filled in Monday's open gap, then closed off the lows. That's not bad action. We could still see a move down to the old breakout line near 2400, but I would expect that area to put up a good fight if tested.
ACWX was down 0.50% yesterday with that dollar rallying again, and the tariff talk not helping. The chart is still above its 200-day EMA, but it may be failing at the old breakout resistance line, if it doesn't move higher from here. You can see the updated I-fund and other TSP share prices and returns posted by about 8:30 PM ET daily here: https://www.tsptalk.com/tsp_share_prices.php
BND (bonds / F-fund) dipped after Monday's big rally, but it looks OK, and it actually held above or on the 20 and 50-day EMAs, so that looks good. Will the PCE Prices inflation data confirm this breakout?
Thanks so much for reading! Happy Thanksgiving! We'll see you back here on Friday for a brief update.
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.
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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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Donald Trump isn't even the president yet but yesterday brought back memories of how much influence he can have on the stock market overnight with one comment. He said he would impose a 25% tariff on imports from Canada and Mexico as well as a 10% tariff on goods from China above any additional tariffs.
The overnight futures fell on that news but by the opening bell the stock market took it in stride and brushed it off. I don't know exactly how I feel about tariffs but I find it interesting that many who oppose tariffs because it could raise consumer prices on items being imported, are typically the same people who are in favor of corporations paying higher taxes, which has a similar effect of potentially raising prices. And vice versa, those who favor tariffs are against raising corporate taxes because it would pass the cost along to consumers. I guess my take would favor tariffs over higher corporate taxes since one promotes buying more American goods and taxing foreign companies over US companies. But again, I'm no expert on that.
Yesterday we saw a shift from the recent trend with large cap techs leading and the smaller, broader indices, lagged. On the NYSE there were two stocks down for each one up, and even the Nasdaq had a negative breadth ratio, but those large caps have a bigger influence on the S&P 500 and Nasdaq's return.
We still saw a solid number of new highs versus new lows yesterday.
The 10-year Treasury Yield was up but it only retraced a portion on Monday's loss, so it may have been the tariffs, or perhaps it was just doing some backing and filling of Monday's gap down. Today's PCE Prices inflation report will likely set a better tone for the direction.
The market leading Dow Transportation Index made a new closing high on Monday but it it also backed off a little yesterday. Like the S-fund chart in the bottom section, that open gap near 17,400 may get filled, but the one down by 16,600 may take a while - perhaps into next year, before it gets challenged.
I have been a little surprised that the investment community is not as exuberant as the recent rally in stocks might suggest it would be. We did see this CNN Fear & Greed Index move from Neutral to Greed territory in recent days, but when you see small caps up 12% in a month, the risky bitcoin trade hitting just short of 100K recently, plus we are heading straight into the strongest seasonal art of the year, yet we aren't near the Extreme Greed Zone yet, it may suggest that stocks have more room to climb up the wall of worry. These sentiment following indicators tend to be contrarian indicators, but only at extremes. It's when everyone is bullish that you have to really start being worried. IT doesn't look like we're there yet.
The market and TSP are closed on Thursday for Thanksgiving and then Friday there will be just a half day of trading, although that won't impact the TSP's 12 noon ET deadline for transactions. I will likely post a brief commentary on Friday.
Have a Happy Thanksgiving!
The S&P 500 (C-fund) closed at a new high on Wednesday and this continues to act well despite a possible double top resistance area. The PMO momentum indicator is back above its moving average so it's back on the buy side for that indicator, although more consolidation, like the handle of a cup and handle formation, could still form from here after that recent rally.
DWCPF (S-fund) pulled back modestly yesterday, filled in Monday's open gap, then closed off the lows. That's not bad action. We could still see a move down to the old breakout line near 2400, but I would expect that area to put up a good fight if tested.
ACWX was down 0.50% yesterday with that dollar rallying again, and the tariff talk not helping. The chart is still above its 200-day EMA, but it may be failing at the old breakout resistance line, if it doesn't move higher from here. You can see the updated I-fund and other TSP share prices and returns posted by about 8:30 PM ET daily here: https://www.tsptalk.com/tsp_share_prices.php
BND (bonds / F-fund) dipped after Monday's big rally, but it looks OK, and it actually held above or on the 20 and 50-day EMAs, so that looks good. Will the PCE Prices inflation data confirm this breakout?
Thanks so much for reading! Happy Thanksgiving! We'll see you back here on Friday for a brief update.
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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