Market Briefing For Tuesday, Sep. 26

Variable contingencies to ruffle the seasonal and post-holiday traditions, of course persist in this market. However, the late firming of the S&P on 'Yom Kippur' likely attest for an old market adage having influence for the moment.


Having suggested the probability of this tradition play-out this year, I expected what we're seeing and some sort of S&P rebound into midweek ensuing. But beyond that it depends. When I listened to the dissenters among Republicans as to 'funding' the Government CR (continuing resolution) I got a different take than some media, because either they (the dissenters) are moderating their resistance, or are not trying to 'burn down the House', just limit the flamers a bit with regard to fueling expenditures in an irresponsible way as they see it.

'If' that's the case, it hints at a compromise deal in the last minutes, avoiding a shutdown and the market will probably like that. The opposite is obvious. If however one asks me about the technical picture of the S&P, I'd say after any bounce (related to post-holiday action or Congress), downside resumption at least temporarily has more work to do.

Hence rallies likely will prove to be unsustainable, but they could be decidedly 'sharp' if for no other reason than negativity is quite dominant again among at least a majority of hedgers, and they could be flipped both into covering their shorts and then panicking back to the negative side. That's why I disagree at least a bit, with those who say 'if' the S&P breaks 4200 on the way down that would be a potential disaster... not exactly. I think it would trigger some 'algo-driven' selling and possibly create a familiar-looking Fall washout scenario.

(Perhaps I'll add that Semiconductors look a bit toppy overall, AEHR in the past has often moved independently, but not so much lately, of the sector. I think it's fine longer term, but depending on next week's 'Call' could wobble.)


'Market X-Ray'

Sees progression of the outlined pattern, with prospects for a rebound after the Yom Kippur holiday. Sustainability probably will need to see progress toward avoiding Government shutdown before weekend deadline.

Speaking of potential headwinds to try blocking much of a rebound, let's just look (as I tend to often say) at both the Dollar & Oil. The strong Dollar tends to be associated with weak S&P, rather than the inverse, but not always.

Of course this also plays toward the Administration wanting to push everyone out of Internal Combustion vehicles in-favor of EV's, so ponder whether White House officials realizes they are making the Fed's role tougher and creating the very inflation they profess to be fighting.

In any case strong Oil benefits owners of storage and anchored tankers in the Gulf of Mexico (odd, Goldman Sachs never mentions such holdings of theirs), and we've been big Oil bulls, but are opposed to letting it run higher. If it does I personally will be fine, but this is about the overall society, not self-interest of course. And Oil way up at such levels (120-150) doesn't compute with goals of lower inflation at all, but could presage lower Oil after economic break.



Meandering through the holidays as stocks spent last week sort of atoning for prior excesses. Many mega-caps are still (or soon again) going to be overpriced especially if any economic slippage is implicated. The Dollar points to something like that, while Oil suggest it will contribute to a struggle (and lower discretionary spending as the majority must drive virtually daily).

There is no change in our overall view and looking for some chop and then a probably rally, although tempered (or escalated) varying with political chatter, as relates to being fixate on the 'shutdown' discussion more than just yield. If you combine high rates and a Government shutdown, well that simplifies this a better, rather than ambiguous interpretations of narrowing 10/30 spreads. It is appropriate anxiety out there, but remember, a great many stocks already are pummeled, so the coin-flipping short-term is mostly about mega-caps. In any event we should get some sort of intraweek rally even if unsustainble.


More By This Author:

Market Briefing For Monday, Sep. 25
Market Briefing For Thursday, Sep. 21
Market Briefing For Wednesday, Sep. 20

This is an excerpt from Gene Inger's Daily Briefing, which typically includes one or two videos as well as more charts and analyses. You can follow Gene on Twitter  more

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