Well, we may have gotten the pivot we expected - we just weren't sure which direction that pivot was going to be. The CPI came in slightly better than expected, and while it was not a great report, it was enough to send relief to those who were concerned about inflation. Yields reversed down on the day and that seemed to be the green light and the 6-week pullback may be over.
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
Here's the CPI details from briefing.com, but as you'll see, it wasn't overly impressive:
Total CPI increased 0.4% month-over-month in December. That was in-line with consensus estimates seen elsewhere.
Core CPI, which excludes food and energy, jumped 0.2% month-over-month, which was slightly better than the consensus estimates seen elsewhere.
On a year-over-year basis, total CPI was up 2.9% versus 2.7% in November while core CPI was up 3.2% versus 3.3% in November.
Not earth shattering, but not too concerning as far as inflation goes either, but it is not the 2% target the Fed is looking for yet. So, it could have been worse and with those reports out of the way and yields rolling over, it was a reason for investors to start buying back some of the stocks that have been declining since the early December peak.
Stocks rallied big on the news, but as is always the case after a pullback or correction, we have to get some follow through and the charts in both stocks and bonds need to hold any repairs they may have made in yesterday's rally.
The 10-year Treasury Yield, as well as all long and short-term bond yields, fell sharply yesterday. This was the green light for the stock market. There was a breakdown from the recent rising support line, but longer-term...
... the 10-year yield is still trending higher. There's just some wiggle room on the downside if this needs to exhale and give investors some relief from higher yields, even if just temporarily.
The decline in yields helped BND (bonds / F-fund) to a big rally, but you can see that the highs of the day ran into that 200-day EMA which, after being support for a while, may turn into resistance. The bulls will really want to see more upside follow through in bonds (downside in yields) today.
The interest rate sensitive S-fund kept up with the large caps with its 1.8% gain yesterday, but technically it is still in that bear flag. I had mentioned a few weeks ago that while this bear flag looked nasty and these flags have a strong tendency to break down, in 2024 many of these bearish flags not only didn't break down, but they preceded some big rallies. It's not easy to see each flag on this year long charts but they all somehow held up, perhaps thanks to that 100-day EMA, which is holding again.
A couple of other catalysts or indices that we like seeing confirm the rally did their jobs yesterday. The financials (XLF) blasted above resistance after decent earnings from Goldman Sachs and JPM.
The Dow Transportation Index was another example of a bear flag that went the "wrong" way. That certainly had me fooled and leaning the wrong way myself. The Transports did close above the 50-day EMA for the first time in over a month, but it also closed well off the highs and was close to becoming a negative reversal day, but as we know, those open gaps can be a lure.
Other than a new president being inaugurated, there's not a lot of financial catalysts between now and the last week in January. There's an FOMC meeting, and PCE inflation report, plus earnings from the Magnificent 7 stocks all report that week: Google Jan 27, Microsoft Jan28, Tesla Jan 28, META Jan 28, Apple Jan 29, and Amazon Jan 29. That will be quite a week.
We have another Federal holiday on January 20 so the stock market and the TSP will be closed on Monday.
Admin note: Final Days! 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) gapped up after that CPI report but it remains in the recent descending channel. As that channel develops it is starting to look more like a big bull flag. However, can it break out before filling in yesterday's open gap, or does it need to back and fill first? Trading volume still isn't great so I'm not sure who was doing the buying.
DWCPF (S-fund) rallied and was able to push through some descending resistance, but technically it is still in the bear flag. However, as we mentioned above, bear flags have not been acting much like bear flags over the last year. Perhaps yesterday was a fake out, but the open gap from November held, as did the 100-day EMA, and it's making another attempt at recapturing the 50-day EMA. The previous attempt failed.
ACWX (the I-fund tracking index) was up 1.18% yesterday and the I-fund was given a gain of 1.18%. The chart improved, but not much. There's still a lot of overhead resistance here.
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
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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
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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
Here's the CPI details from briefing.com, but as you'll see, it wasn't overly impressive:
Total CPI increased 0.4% month-over-month in December. That was in-line with consensus estimates seen elsewhere.
Core CPI, which excludes food and energy, jumped 0.2% month-over-month, which was slightly better than the consensus estimates seen elsewhere.
On a year-over-year basis, total CPI was up 2.9% versus 2.7% in November while core CPI was up 3.2% versus 3.3% in November.
Not earth shattering, but not too concerning as far as inflation goes either, but it is not the 2% target the Fed is looking for yet. So, it could have been worse and with those reports out of the way and yields rolling over, it was a reason for investors to start buying back some of the stocks that have been declining since the early December peak.
Stocks rallied big on the news, but as is always the case after a pullback or correction, we have to get some follow through and the charts in both stocks and bonds need to hold any repairs they may have made in yesterday's rally.
The 10-year Treasury Yield, as well as all long and short-term bond yields, fell sharply yesterday. This was the green light for the stock market. There was a breakdown from the recent rising support line, but longer-term...
... the 10-year yield is still trending higher. There's just some wiggle room on the downside if this needs to exhale and give investors some relief from higher yields, even if just temporarily.
The decline in yields helped BND (bonds / F-fund) to a big rally, but you can see that the highs of the day ran into that 200-day EMA which, after being support for a while, may turn into resistance. The bulls will really want to see more upside follow through in bonds (downside in yields) today.
The interest rate sensitive S-fund kept up with the large caps with its 1.8% gain yesterday, but technically it is still in that bear flag. I had mentioned a few weeks ago that while this bear flag looked nasty and these flags have a strong tendency to break down, in 2024 many of these bearish flags not only didn't break down, but they preceded some big rallies. It's not easy to see each flag on this year long charts but they all somehow held up, perhaps thanks to that 100-day EMA, which is holding again.
A couple of other catalysts or indices that we like seeing confirm the rally did their jobs yesterday. The financials (XLF) blasted above resistance after decent earnings from Goldman Sachs and JPM.
The Dow Transportation Index was another example of a bear flag that went the "wrong" way. That certainly had me fooled and leaning the wrong way myself. The Transports did close above the 50-day EMA for the first time in over a month, but it also closed well off the highs and was close to becoming a negative reversal day, but as we know, those open gaps can be a lure.
Other than a new president being inaugurated, there's not a lot of financial catalysts between now and the last week in January. There's an FOMC meeting, and PCE inflation report, plus earnings from the Magnificent 7 stocks all report that week: Google Jan 27, Microsoft Jan28, Tesla Jan 28, META Jan 28, Apple Jan 29, and Amazon Jan 29. That will be quite a week.
We have another Federal holiday on January 20 so the stock market and the TSP will be closed on Monday.
Admin note: Final Days! 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) gapped up after that CPI report but it remains in the recent descending channel. As that channel develops it is starting to look more like a big bull flag. However, can it break out before filling in yesterday's open gap, or does it need to back and fill first? Trading volume still isn't great so I'm not sure who was doing the buying.
DWCPF (S-fund) rallied and was able to push through some descending resistance, but technically it is still in the bear flag. However, as we mentioned above, bear flags have not been acting much like bear flags over the last year. Perhaps yesterday was a fake out, but the open gap from November held, as did the 100-day EMA, and it's making another attempt at recapturing the 50-day EMA. The previous attempt failed.
ACWX (the I-fund tracking index) was up 1.18% yesterday and the I-fund was given a gain of 1.18%. The chart improved, but not much. There's still a lot of overhead resistance here.
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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