06/05/25
Stocks did see a shift yesterday; not because the indices fell sharply, although they did close off the highs, but the dip buyers failed to show up late as they had been recently. There was some weak jobs data released and tariff talks with China aren't going very well as Trump says Xi is a tough negotiator. Yields and the dollar were down helping the F and I-funds lead the way on Wednesday.
(The most current commentary is always posted here: www.tsptalk.com/comments.php)
The fact that stocks didn't sell off on the concerning tariff news does say something about where we are in the tariff tantrum situation. Investors seems to believe a deal is going to get done so the time to panic is over.
The May jobs report will be out on Friday. Estimates are looking for a gain of 125,000 - 130,000 jobs and an unemployment rate of 4.2%.
This is always an important report but it may have been magnified by yesterday's ADP Employment Change report. That report in and of itself is not usually a market mover, but it came in much weaker than expected prompting concerns about tomorrow's monthly report.
Interestingly, the stock market didn't react too much because the weak data did sent the 10-year Treasury Yield and the dollar lower on the day, and that helped the stock market.
This data employment helps the case for an interest rate cut from the Fed. We have seen evidence of inflation nearing their target levels already with lat month's PCE report. Now with the employment data showing signs of weakness, the Fed may have what it needs to finally start cutting, or at least that's what the probabilities say.
The top chart is the current expectations for the September meeting where a week ago there was a 41.1% chance that the Fed was going to keep rates the same by that meeting. That has changed to 23.7%, which was a drop from the 29.6% chance just a day before. That means the chances of some kind of cut by September is now 76.3%.
The bottom chart is the probability of a rate cut by the July meeting which is about 30%, up from 24.4% just the day before. That's a 69.9% chance of no change so the September meeting is still the consensus for the next rate cut.
The S&P 500 (C-fund) was flat yesterday after it gave up some early gains, and it stalled right at the red resistance line that we've been watching. It also ran up to the old rising support line (blue) but failed to go any further, so the old broken support continues to hold as resistance as well, but that line is rising.
The PMO momentum indicator above looks overbought as it hovers near 2.0. I could have looked at almost any strong bull market, but I chose 2018 to 2019 to show that, even though this can get extended and into overbought territory, it can remain there while the market continues to rally. It's a warning sign, but not always a reason to sell right away. Those rectangles span months and the current PMO just crossed zero about 4 weeks ago.
I will be on the road after the TSP deadline today, and won't be back in my office until Tuesday morning. I plan to post updates daily, but they may be on the brief side. I may also take a little more time to respond to emails so I apologize in advance for any inconveniences.
The DWCPF (S-fund) made a very half-hearted effort to breakout of its small handle formation, or the right shoulder of an inverted head and shoulders pattern, but failed. Perhaps today or maybe investors want to see Fridays jobs report before paying a higher price than they've paid since early March in this index.
ACWX (I-fund) made another new high yesterday as the back and forth dollar was down yesterday. It's tough to argue with new highs, and as I mentioned above about the S&P 500 showing signs of being overbought - that doesn't mean it has to come down. Momentum can take this up longer than we think is reasonable. We did see some consolidating but this chart is still thin on support below 59 and 57.
BND (bonds / F-fund) had a big day as yields fell on the ADP jobs data. For a third time now, this chart is attempting to breakout out and stay above that red trading channel. Support at the 200-day average has been rock solid so maybe the resistance will finally give out for longer than a few days?
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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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 may use additional methods and strategies to determine fund positions.
Stocks did see a shift yesterday; not because the indices fell sharply, although they did close off the highs, but the dip buyers failed to show up late as they had been recently. There was some weak jobs data released and tariff talks with China aren't going very well as Trump says Xi is a tough negotiator. Yields and the dollar were down helping the F and I-funds lead the way on Wednesday.
(The most current commentary is always posted here: www.tsptalk.com/comments.php)
| Daily TSP Funds Return More returns |
The fact that stocks didn't sell off on the concerning tariff news does say something about where we are in the tariff tantrum situation. Investors seems to believe a deal is going to get done so the time to panic is over.
The May jobs report will be out on Friday. Estimates are looking for a gain of 125,000 - 130,000 jobs and an unemployment rate of 4.2%.
This is always an important report but it may have been magnified by yesterday's ADP Employment Change report. That report in and of itself is not usually a market mover, but it came in much weaker than expected prompting concerns about tomorrow's monthly report.
Interestingly, the stock market didn't react too much because the weak data did sent the 10-year Treasury Yield and the dollar lower on the day, and that helped the stock market.
This data employment helps the case for an interest rate cut from the Fed. We have seen evidence of inflation nearing their target levels already with lat month's PCE report. Now with the employment data showing signs of weakness, the Fed may have what it needs to finally start cutting, or at least that's what the probabilities say.
The top chart is the current expectations for the September meeting where a week ago there was a 41.1% chance that the Fed was going to keep rates the same by that meeting. That has changed to 23.7%, which was a drop from the 29.6% chance just a day before. That means the chances of some kind of cut by September is now 76.3%.
The bottom chart is the probability of a rate cut by the July meeting which is about 30%, up from 24.4% just the day before. That's a 69.9% chance of no change so the September meeting is still the consensus for the next rate cut.
The S&P 500 (C-fund) was flat yesterday after it gave up some early gains, and it stalled right at the red resistance line that we've been watching. It also ran up to the old rising support line (blue) but failed to go any further, so the old broken support continues to hold as resistance as well, but that line is rising.
The PMO momentum indicator above looks overbought as it hovers near 2.0. I could have looked at almost any strong bull market, but I chose 2018 to 2019 to show that, even though this can get extended and into overbought territory, it can remain there while the market continues to rally. It's a warning sign, but not always a reason to sell right away. Those rectangles span months and the current PMO just crossed zero about 4 weeks ago.
I will be on the road after the TSP deadline today, and won't be back in my office until Tuesday morning. I plan to post updates daily, but they may be on the brief side. I may also take a little more time to respond to emails so I apologize in advance for any inconveniences.
The DWCPF (S-fund) made a very half-hearted effort to breakout of its small handle formation, or the right shoulder of an inverted head and shoulders pattern, but failed. Perhaps today or maybe investors want to see Fridays jobs report before paying a higher price than they've paid since early March in this index.
ACWX (I-fund) made another new high yesterday as the back and forth dollar was down yesterday. It's tough to argue with new highs, and as I mentioned above about the S&P 500 showing signs of being overbought - that doesn't mean it has to come down. Momentum can take this up longer than we think is reasonable. We did see some consolidating but this chart is still thin on support below 59 and 57.
BND (bonds / F-fund) had a big day as yields fell on the ADP jobs data. For a third time now, this chart is attempting to breakout out and stay above that red trading channel. Support at the 200-day average has been rock solid so maybe the resistance will finally give out for longer than a few days?
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 may use additional methods and strategies to determine fund positions.
