It did not take long for the market to rebound from yesterday’s losses. The top sector in the S&P 500 was Information Technology followed by Industrials. Utilities were the worst performing sector with only a one basis point move higher. Volume was lower across the board, but this market has this type of character: low volume bounces. We are only in day 6 of an attempted rally after our new crash low set more than a week ago. It is possible we see a follow-through type day. Whether or not it holds is a different story all together. We first have to see a follow-through day. Today was a solid day, but it was only one day. We will continue to monitor for our price signals and look out for any sign of a new confirmed rally. Until then we will remain patient.
There are three key events coming up. First is the ECB and they are set to release their latest statement Thursday morning. Most will be watching to see if the ECB will increase their current QE program. At this point, there is a lot of hope Draghi comes through and expands the program. The second will be Friday’s job report. A robust report will likely bolster expectations for the Fed to hike rates next week. Obviously the third event will be next week’s FOMC meeting and its statement release on Wednesday. These key events will likely move markets. In what direction is anyone’s best guess to where we will go. Keep an open mind and stay disciplined.
The last of the major market averages not witness a death cross is the NASDAQ Composite. The S&P 500 and Dow Jones Industrial average have both seen their 50 day moving averages cross under their 200 day moving averages. While the NASDAQ has yet to see the death cross it is fast approaching. It does not guarantee an all-out assault on stocks. It simply showcases weakness. We prefer strength and will comb this market to find the stocks bucking the trend.
We should see a bit more volatility from this market. September is not a kind month for stocks historically. Stay focused on your strategy and avoid the hero syndrome.
