Bulls in Control, But a Weak Close Can Change the Narrative
Anticipatory bears are growing frustrated, but momentum has slowed and several catalysts await.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
The S&P 500 and DJIA are hovering near all-time highs on Wednesday morning after shrugging off weak consumer sentiment and receiving a boost from massive economic stimulus in China. Many stocks remain technically extended, and there is little upside progress, but the dip buyers are providing support and the market is staying sticky to the upside.
There are several catalysts coming up that will create some movement, but as we saw on the consumer confidence news, market participants are anxious to put more cash into working on relatively-minor weaknesses.
Jerome Powell will speak on Thursday and, on Friday, the PCE inflation report will be presented. The market is still celebrating the afterglow of the half-point Fed rate cut and embracing the soft-landing economic narrative, but there are signs of nervousness about economic slowing, and it won’t take much to reach a tipping point.
The stimulus in China helped to boost sentiment, but there are comments from economists about how deep the problems are in the Chinese economy. Deflation is a major concern, and the view is that China will need far more stimulus to reach its GDP growth target of 5%.
I have been cautious about the market for a while due to a lack of good chart setups and entry points, but the indices are still holding up and are slowly working off their overbought conditions. Upside progress has been slow, but it has been stubborn and is squeezing overly-anticipatory bears.
I would like to put more money into my work, but I’m staying very disciplined with my buys and resisting FOMO. I am also concerned that there will be at least one bout of negative seasonality before we move into earnings season in a few weeks. Charts need a pullback or more consolidation before they will be able to develop better entry points.
We have a slightly negative start on Wednesday morning, but until there is a weak finish or two, the bulls are in control.
At the time of publication, DePorre had no positions in any securities mentioned.
