August 2, 2022
Good morning,
I apologize for yesterday’s unannounced missed note – some readers worry when that happens, and I appreciate that. I overestimated, not for the first time, my on-road digital connectivity. Starting Saturday morning, Sara (our freshly minted graduate) and I drove her worldly possessions x-country to her new home, NYC! So happy to have her here, and hopefully for quite a while – I don’t want to do another 3-day drive across our beautiful continent any time soon. Anyway, I must get the publishing apps used for the Morning Note iphone ready – they weren’t yesterday to my surprise.
Had I been able to publish yesterday morning while crossing the Illinois/Indiana state line, I would have updated you on the condition of our 2wk old rally in the equity market. Technically, several, but not a majority, of breadth trust indicators have fired. This is an improvement over the signals fired in March and May on those two rallies. However, for the current rally to distinguish itself from the first two bear market rallies this year, we need more. When this rally started, we mentioned the relatively light resistance the tape should encounter on its way up. From the S&P 500 Index reading of 3750, about where the rally began, first significant overhead resistance would be in the 4200 region. The S&P is at ~4120 now – resistance lies ahead. If this rally is more than just the bear market kind, it will have to clear 4200 and produce more positive breadth signals in the process. Finally, given the massive decline in yields recently (3.5% to 2.5% on the US-10yr in weeks), if the equity market can’t do more than stall– well, then we’ll have our verdict.
Given yesterday’s miss, I will abort the standard M-W-F publishing cadence this week – see you Thursday morning.
Be well
Mike