September 5, 2023
Good morning,
In addition to being one day shorter than usual, there is no treasury issuance (supply) and, no key economic data announcements this week. Following a strong rally last week (lower yields) into the employment data, yields are back up this morning and left on their own. We are seven trading days away from the next key piece of inflation data – CPI (Consumer Price Index), a week from tomorrow. So much for the blank macroeconomic picture this morning.
The technical analysis picture is not much clearer this first morning of the last third of the year. When added together, the various trend indicators (aka the tape) lean bullish but not in any convincing fashion. The highly bullish sentiment present at the beginning of August has been neutralized by August’s 5% mid-month correction and is nowhere near pessimistic (oversold). Sentiment is in no-man’s land currently, vacillating between bullish and bearish extremes. The Fed is not accommodating in any way, but an argument could be made that it is no longer a headwind for equities (I’m not in that camp and I do not think the tightening cycle is over, but I’m trying to present a balanced picture this morning). In conclusion, technically, the bulls get the benefit of the doubt, but there are enough concerns to stay alert to a quick deterioration of the technical picture.
See you Thursday.
Be well,
Mike
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