The stock market continues to get tossed around following what appeared to be a warmer than expected PPI report and the ever changing tariff situation after Trump signed an executive order on reciprocal tariffs, but they also delayed the start of other tariffs. Stocks were up, down, then up again while bond yields came falling back down after the CPI moved them up sharply on Wednesday.
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
It's getting difficult to follow the bouncing ball (showing my age) but there's no doubt that there is some resilience in the stock market regardless of what is being thrown at it. The tariff situation is a known unknown, the inflation picture remains warm, yet the market is brushing it off. It could be a number of reasons, but as I talked about a few times recently, the market is also getting some help from the money supply.
Remember this X post from @TomasOnMarkets that I wrote about a few days ago?:
"The US Government will soon begin a drawdown of the Treasury General Account (TGA).
"This could mean a liquidity injection totaling up to $830bn.
"Functionally, this is similar to Quantitative Easing."
So there are some very bullish developments for the market, and some that are concerning like inflation, yet the stock market is holding up very well. In the case of the S&P 500 - it is flirting with a breakout above a large bull flag and it is challenging the old highs.
The bond market bounced right back yesterday after Wednesday's sharp decline. The 10-year Treasury Yield fell sharply giving back all of Wednesday's rally, and then some because... does anybody have a good theory? The PPI inflation data was not very inflation friendly, and the jobless claims were better than expected (fewer claims) so this didn't make sense to me and I must have missed something - but that's how the bond market rolls, and it's smarter than I am. The yield is sitting on a bunch of support so let's see where it goes from here.
BND moves counter to yields helping the F-fund to a gain of about 0.60% on Thursday. It is back above its 50-day EMA and now banging against the trading channel resistance line again.
Let's go back to the seasonality chart for February. Remember, these are 30-year averages - not fluky one year anomalies. This week, a pre-holiday week, has had a very bullish bias. Next week, not so much, so if you're thinking of jumping on the upside momentum, you're taking a chance at swimming upstream and against the current. You never know, the news flow may be on the bulls' side again, but otherwise the tendency for a post-holiday reversal rises. February 21st has just a 30% "win" rate over the last 30 years. The 18th and 20th are just 40%.
There's always something going on that can scare us out of stocks. Going with the trend makes money. For timers, the trick is sell before everyone else does, and buy before them as well, but that's not easy because, as John Maynard Keyne said long ago, "markets can remain irrational longer than you can remain solvent", (up or down.) Not that the market is acting irrationally, but you usually don't process it until after the fact.
Holiday Closing: According to tsp.gov, "some financial markets will be closed on Monday, February 17, in observance of Washington’s Birthday (President’s Day). The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (February 17) will be processed Tuesday night (February 18) at Tuesday's closing share prices."
The S&P 500 (C-fund) busted right through a couple of key resistance areas yesterday, and that's a bull flag breakout, although we'd really like to see that hold for a couple more days. It's also at the top of a long range so is it a buy the breakout situation, or an indication to sell the top of the range? It's tough to see this as a bearish chart, but seasonality next week could be a challenge for the stock market.
DWCPF (S-fund) gained over 1% yesterday and, after falling below it on Wednesday, the rally pushed it right back above its 50-day EMA - and that reminds us why we like to wait 3+ days to confirm a break down or breakout. It has been trading in this area for many months now, which is near the middle of the recent range of the highs and lows. Fair chart, but still lagging.
ACWX (the I-fund tracking index) also gained over 1% yesterday. This chart broke out above resistance and is in a strong uptrend. In the short-term it may be overbought, but there is bullish momentum.
Thanks so much for reading! Have a great long holiday weekend!
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.
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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
It's getting difficult to follow the bouncing ball (showing my age) but there's no doubt that there is some resilience in the stock market regardless of what is being thrown at it. The tariff situation is a known unknown, the inflation picture remains warm, yet the market is brushing it off. It could be a number of reasons, but as I talked about a few times recently, the market is also getting some help from the money supply.
Remember this X post from @TomasOnMarkets that I wrote about a few days ago?:
"The US Government will soon begin a drawdown of the Treasury General Account (TGA).
"This could mean a liquidity injection totaling up to $830bn.
"Functionally, this is similar to Quantitative Easing."
So there are some very bullish developments for the market, and some that are concerning like inflation, yet the stock market is holding up very well. In the case of the S&P 500 - it is flirting with a breakout above a large bull flag and it is challenging the old highs.
The bond market bounced right back yesterday after Wednesday's sharp decline. The 10-year Treasury Yield fell sharply giving back all of Wednesday's rally, and then some because... does anybody have a good theory? The PPI inflation data was not very inflation friendly, and the jobless claims were better than expected (fewer claims) so this didn't make sense to me and I must have missed something - but that's how the bond market rolls, and it's smarter than I am. The yield is sitting on a bunch of support so let's see where it goes from here.
BND moves counter to yields helping the F-fund to a gain of about 0.60% on Thursday. It is back above its 50-day EMA and now banging against the trading channel resistance line again.
Let's go back to the seasonality chart for February. Remember, these are 30-year averages - not fluky one year anomalies. This week, a pre-holiday week, has had a very bullish bias. Next week, not so much, so if you're thinking of jumping on the upside momentum, you're taking a chance at swimming upstream and against the current. You never know, the news flow may be on the bulls' side again, but otherwise the tendency for a post-holiday reversal rises. February 21st has just a 30% "win" rate over the last 30 years. The 18th and 20th are just 40%.
There's always something going on that can scare us out of stocks. Going with the trend makes money. For timers, the trick is sell before everyone else does, and buy before them as well, but that's not easy because, as John Maynard Keyne said long ago, "markets can remain irrational longer than you can remain solvent", (up or down.) Not that the market is acting irrationally, but you usually don't process it until after the fact.
Holiday Closing: According to tsp.gov, "some financial markets will be closed on Monday, February 17, in observance of Washington’s Birthday (President’s Day). The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (February 17) will be processed Tuesday night (February 18) at Tuesday's closing share prices."
The S&P 500 (C-fund) busted right through a couple of key resistance areas yesterday, and that's a bull flag breakout, although we'd really like to see that hold for a couple more days. It's also at the top of a long range so is it a buy the breakout situation, or an indication to sell the top of the range? It's tough to see this as a bearish chart, but seasonality next week could be a challenge for the stock market.
DWCPF (S-fund) gained over 1% yesterday and, after falling below it on Wednesday, the rally pushed it right back above its 50-day EMA - and that reminds us why we like to wait 3+ days to confirm a break down or breakout. It has been trading in this area for many months now, which is near the middle of the recent range of the highs and lows. Fair chart, but still lagging.
ACWX (the I-fund tracking index) also gained over 1% yesterday. This chart broke out above resistance and is in a strong uptrend. In the short-term it may be overbought, but there is bullish momentum.
Thanks so much for reading! Have a great long holiday weekend!
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.
