The S&P 500 scored back-to-back weekly losses closing Friday at a Year To Date (YTD) low of 5,827. Monday started off on a positive note as it added another 0.55% to the previous Fridays gain of over 1%. Tuesday set the tone for the rest of the week, that being a focus on interest rates. On Tuesday morning the Institute for Supply Management reading showed a greater-than-expected expansion in the U.S. services sector, fanning concerns about inflation and questions around the trajectory of 2025 Fed interest rate cuts. By Tuesdays close the S&P 500 notched a daily loss of over 1% and the 10-year Treasury note climbed to a level not seen since 24 April 2024. Wednesday marked the end of the First Five Trading Days period, which is considered bullish for the rest of the year if it has a positive return. That said the S&P 500 closed 2024 at 5,881, and the S&P dropped below that level for the majority of the day before squeezing out a slight gain and closing at 5,918 for a bullish First Five Trading Days period. Thursday the markets were closed for President Carters Day of mourning, but before Fridays open the December jobs report was released. Overall, payrolls grew by 256,000, well above the expected increase of 155,000, and the unemployment rate fell below the expected 4.2% level to 4.1%. With that hot report, the S&P 500 gapped down at the open and finished at session lows for its second daily loss of over 1% in the week. Concurrent with that, the 10-year Treasury note spiked to 4.79%, its highest level since November 2023. From a technical perspective we are seeing a bearish trend of lower highs and lower lows for all major market indices. Looking at the S&P 500, it closed at a record intraday high of 6,099 on 4 December. After the last Fed meeting, it sold off to a low of 5,832 on 20 December. It then rebounded to a high of 6,049 on 26 December, not making a new high. It then dropped to 5,829 on 2 January, making a new low. Next, it bounced up to 6,021 on 6 January, again not making a new high. Finally on Friday, the S&P 500 made a new intraday and YTD low of 5,807. To summarize, this series of lower highs and lower lows does not lend itself to a turnaround unless that string is broken, which would be a breakout above the last intraday new high of 6,021. For next week we get inflation numbers on Tuesday and Wednesday, and Wednesday also marks the beginning of earnings season with banks reporting. For TSP TIPS the I funds Composite Score remains at zero, while the C and S Composite Scores have been decreasing. When you combine that with the above mentioned lower highs and lower lows scenario, we are recommending the following new investment mix.
The S&P 500 scored back-to-back weekly losses closing Friday at a Year To Date (YTD) low of 5,827. Monday started off on a positive note as it added another 0.55% to the previous Fridays gain of over 1%. Tuesday set the tone for the rest of the week, that being a focus on interest rates. On Tuesday morning the Institute for Supply Management reading showed a greater-than-expected expansion in the U.S. services sector, fanning concerns about inflation and questions around the trajectory of 2025 Fed interest rate cuts. By Tuesdays close the S&P 500 notched a daily loss of over 1% and the 10-year Treasury note climbed to a level not seen since 24 April 2024. Wednesday marked the end of the First Five Trading Days period, which is considered bullish for the rest of the year if it has a positive return. That said the S&P 500 closed 2024 at 5,881, and the S&P dropped below that level for the majority of the day before squeezing out a slight gain and closing at 5,918 for a bullish First Five Trading Days period. Thursday the markets were closed for President Carters Day of mourning, but before Fridays open the December jobs report was released. Overall, payrolls grew by 256,000, well above the expected increase of 155,000, and the unemployment rate fell below the expected 4.2% level to 4.1%. With that hot report, the S&P 500 gapped down at the open and finished at session lows for its second daily loss of over 1% in the week. Concurrent with that, the 10-year Treasury note spiked to 4.79%, its highest level since November 2023. From a technical perspective we are seeing a bearish trend of lower highs and lower lows for all major market indices. Looking at the S&P 500, it closed at a record intraday high of 6,099 on 4 December. After the last Fed meeting, it sold off to a low of 5,832 on 20 December. It then rebounded to a high of 6,049 on 26 December, not making a new high. It then dropped to 5,829 on 2 January, making a new low. Next, it bounced up to 6,021 on 6 January, again not making a new high. Finally on Friday, the S&P 500 made a new intraday and YTD low of 5,807. To summarize, this series of lower highs and lower lows does not lend itself to a turnaround unless that string is broken, which would be a breakout above the last intraday new high of 6,021. For next week we get inflation numbers on Tuesday and Wednesday, and Wednesday also marks the beginning of earnings season with banks reporting. For TSP TIPS the I funds Composite Score remains at zero, while the C and S Composite Scores have been decreasing. When you combine that with the above mentioned lower highs and lower lows scenario, we are recommending the following new investment mix.