Thursday’s session saw Industrials lead the way while volume dropped on both exchanges. We have seen volume drop in consecutive days indicating this may just be a dead cat bounce. This does not mean after the jobs report prior to Friday’s session we cannot see a confirmed rally. The lack of volume is a bit of a concern, but it is not fatal flaw of the market. Dow Transports and Small Cap stocks both finished lower on the session. IWM at least finished in its upper half of the session. Friday’s job report will be one the media will have fun with given the Trade and Tariff noise. It all comes back to the Federal Reserve Bank and whether they will act. Is the number bad enough to get the bank to cut rates? We’ll let the pundits banter back and forth over it while we pay attention to what really matters. Day 4 is upon us and we will see if we get confirmation of this rally.
Sentiment has turned quite negative in the past week. AAII Bull dropped to 22.5% down 2.3 points for the week. Bears in the survey jumped 2.5 points to 42.6%. Quite the spread between the two while Neutral respondents ended the week at 34.9%. NAAIM Exposure index dropped again ending the week at 54.99. While not at an extreme we do have a situation where sentiment is negative enough this bounce may have more behind it. Equity outflows with $12.2 Billion pulled from equity funds last week. Big time outflows. A good indication we have a short-term low and a bounce has legs. Now, hitting new all-time highs again is another question. For now, we have a market with conditions a good not great bounce is in the cards.
As we wrap the week this market is a grind. For those with a solid process find this grind to be enjoyable. We love this game! Price remains the name of the game and we will continue to grind out this market and take what it gives us. We hope you have a tremendous weekend and look forward to closing out this week on top!
