Market Briefing For Tuesday, Sept. 27

Re-balancing shuffles combined with some snapback among the heavily beaten FANG stocks, to allow the irregular comeback expected for Tuesday.

Chair Yellen's comments, essentially inferring the Fed didn't know inflation's containment or revival prospects, were not really well received; buffering the market a bit later. That's not a surprise; we know they want to drain the Fed Balance Sheet, an almost impossible task; and we knew the prognostication about growth requiring a snugging-up of policy was a fiction and not the real reason for the Fed's policy shift. They are sort of acknowledging that.

To some degree that brings a smile; as so many believe Fed transparency is a hallmark of 'why' the market held-up so tenaciously for so long. However if the Fed doesn't have much of a clue about where things are headed, where is the benefit of that revered transparency? It vanishes so that's contributing a bit to a more fluid market. I suspect that gets amplified in October.  

None of this changes the concerns about October; although it's fairly clear a movement from momentum to value stocks has been ongoing near-term. To me that's the primary reason the Russell advanced even while the big S&P and DJIA were on the defensive. It's also reflective of a Quarter's-end shift.  

Daily action was pretty firm from the get-go then ran into resistance. Apart month-end activity, there's a lingering sense of selling rallies in the damaged or dubious momentum stocks, which really shouldn't be surprising at all. Too many overstayed in those positions (if they're not truly long-term investors). It's a big part of why we advised not chasing the whole category for months.