August 15, 2022
Good morning,
After four straight weeks of rally for the equity market, much of its oversold condition has been worked off. In fact, short-term, daily indicators of sentiment (trading tools really) have now moved into overbought territory for the first time all year. I think at a minimum, we can expect some back-and-fill to the tape in the days ahead. If so, it would not necessarily mean the end of this summer’s rally.
Futures are off pre-market this morning by about -0.75%. A wretched set of growth figures from China and a surprise rate cut there has been weighing on the overnight market. It seems to be a bit of a reminder that the global economy isn’t out of the water yet– not least because Europe hasn’t yet felt the impact of the squeeze in natural gas prices that looms for the coming winter. Most of the damage this morning is in the commodity market.
How well our equity rally handles this fresh wave of selling will be a nice gauge on its health and durability. See you Wednesday.
Be well,
Mike