Get Ready for the Heaviest Volume Day of the Year
Here's what to know about Friday's trading, which will be impacted by changes to the Russell indexes and ETFs, PCE inflation data and the aftermath of the presidential debate.
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On Thursday, there was some slight rotation into the Russell 2000 IWM stocks, but overall action was positive, with mild gains in all the indexes and positive breadth. New 12-month highs exceed new lows for the first time in the last few days, and Microsoft MSFT, Alphabet GOOGL, and Amazon AMZN all hit new all-time highs. Nvidia NVDA and semiconductor stocks lagged a little.
The upcoming changes in the Russell indexes and various ETFs are still creating unusual volatility in many individual stocks. That will come to an end at the close on Friday.
Friday will be the largest volume day of the year, with large blocks crossing at the close. It will mess up the volume of charts, but once that is done, there will be more focus on fundamentals and chart setups.
Also, the PCE inflation data and personal spending and income reports will be issued on Friday. This may have some impact if it varies significantly from expectations, but no big surprise is likely.
The main issue that the market is grappling with right now is whether there will continue to be narrow big-cap leadership or if some sort of shakeup is about to occur. With three of the Magnificent Seven names hitting new all-time highs and several others very close, it is hard to say that momentum is slowing, but at least it was not quite as narrow, and breadth was positive.
There will also be lots of talk about the presidential debate Friday morning, but it is not likely to have any immediate market impact unless something shocking occurs.
Be ready for the indexing action and inflation news on Friday.
Enjoy the evening. I’ll see you tomorrow.
At the time of publication, Rev Shark had no positions in any securities mentioned.
