The Bears Have Some Good Arguments, But the Bulls Have Something Better
Dip buyers keep bailing out the market but economic optimism could be fickle.
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For the second day in a row, dip buyers bailed out the market and prevented downside momentum from building. The lows on Wednesday were hit a few minutes after the opening bell, and then action improved for the rest of the day.
All of the major indices finished close to flat, with the Nasdaq 100 QQQ managing a gain of 0.14%. Breadth was slightly negative, and new highs were still quite good, with around 370 names.
In view of the negative news flow, it was a good showing. Concerns are building about the likelihood of an Israeli retaliation against Iran, and the dockworkers' strike looks like it could drag out. There are already some reports of hoarding action at various stores.
What is bringing in the buyers is continued economic optimism and a good record of success for dip buyers. Dip buying is working, and it will continue to attract interest until there are some weak closes or failed bounces.
The bears may have some very good arguments, but the bulls still have fairly good price action, and that is all that really matters.
On Thursday, we will see the weekly unemployment claims and ISM Services numbers, but on Friday, we will see the jobs report for the month of September, which will be very important. The ADP jobs numbers on Wednesday came in higher than expected, which sent bond yields higher, but there was some late-day recovery in the 20-plus year treasury bond fund (TLT). A hot jobs number will be a problem for bonds and may dent the Goldilocks economic narrative.
Have a good evening. I'll see you tomorrow.
At the time of publication, DePorre had no positions in any securities mentioned.
