October 4, 2021
Good morning,
Friday’s 1% gain in the S&P 500 wasn’t a bad way to start the quarter. However, the market is a forward looking beast with no memory, so what’s ahead? It’s payroll week and it is starting this morning with yields up slightly on the US-10yr at 1.47% (having settled down a little from 1.55% high last week) and Futures on the lower edge of unchanged off <10bps (2-3 S&P points). This Friday’s employment numbers for September will effectively be either an endorsement of a taper in a month’s time – or a shockingly poor employment report. You would think taper is largely priced in, so Friday may hold a positive surprise for stocks or be business as usual.
Following a tough month, U.S. and Global trend evidence still leans bullish as it has for quite a while now. Yes, there are some chinks in the armor that we’ve mentioned before – namely a very high number of new lows being made (bad breadth), and a moving average model that flashed a negative signal. But the process is a balance of evidence one, and at this point the probability of a Q4 rally is still greater than a trend change from a bull market.
Be well,
Mike