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Goodbye September
Two things are for sure. September finally ended and energy is alive and well on Wall Street.
Buy-The-Dippers Return
Last week's short pullback began the Friday before when the S&P 500 Index closed below support at the 50-day Moving Average.
Holding The Line
Last week the S&P 500 Index failed to hold narrowly defined support at the 50-day Moving Average.
Storm Clouds Gathering
Last week pullback signs began to appear as the S&P 500 Index declined every day gaining downside momentum as the week ended.
Better Breadth
Last week more issues joined the advance so breadth improved slightly delighting the bulls.
Baffling Breadth
Due to its importance as an indicator of the overall market condition and not necessarily useful for exact market timing, a focus on market breadth will continue until it improves or drags the entire market lower.
Breadth Disappoints
Although Friday's trading was encouraging, deteriorating market breadth suggests otherwise.
Breadth Improving
Multiple new closing and intraday highs by the major indices confirm market strength along with rotation into value and cyclicals although August seasonally reflects lower trading volume and less support for higher prices.
Big Cap Earnings
Last week the widely followed big capital growth stocks reported earnings and up until Friday, it seemed all was well.
Buy The Dippers Pounced
After a quick three-day pullback including a gap opening lower last Monday as the S&P 500 briefly exceed the 50-day Moving Average before closing higher, buy the dippers ended the decline on Tuesday.
Earnings Prelude & Crude Oil
Warnings of an impending pullback from indicators such as market breadth and a slightly positive VIX correlation went unheeded last week as the S&P 500 Index pushed up into new high territory again on Friday.
Rotation Derby
Last week the S&P 500 Index made new closing and new intraday highs every day with secular growth leading the rotation derby three days, cyclicals one day, and one day a draw with no clear winner.
Secular Growth Edge
With the exception of the market, breadth all the indicators turned bullish again last week canceling the need to hedge long positions.
Less Accommodative Not Hawkish
While some in the financial media claim the Federal Reserve turned hawkish last week, others thinking they just turned a bit less accommodative were right until Friday.
Consumer Price Index - No Surprise
Unlike the April Consumer Price Index report, this time for May, the markets expected higher inflation numbers since interest rates on the 10-Year Treasury Note declined 5 basis points to end at 1.45%.
Rotation Narration
The Bureau of Economic Analysis reported on Friday that the Personal Consumption Expenditures Price Index or PCE for April, excluding food and energy, referred to as the core PCE price index +.7% or +3.1% from April 2020 during the Covid shutdown.
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