S&P 500 closes the month with nearly 5% in gains despite a government shutdown. Volume was up on the day as end-of-the-month shenanigans elevated turnover. It appeared the market was going to close higher, but late day sellers spoiled the fun. The Dow Jones Industrial average really took it on the chin at the close. Given the rise in volume the market notched another distribution day. All uptrends contend with distribution and we’ll need to see a bit more evidence to move away from this uptrend.
There is anecdotal evidence we may be near an intermediate top in this market. Yesterday we pointed out the number of bulls in the II survey and now we see bulls continue to dominate the AAII Survey. 45% of survey respondents said they were bullish while only 21% said they were bullish. The II survey is at an extreme while the AAII comprised of individual investors simply isn’t at an extreme. Perhaps we don’t need it to, but it is interesting the AAII survey continues to refuse to go to extremes. NAAIM survey of investment managers shows managers are pretty bullish. Sentiment sure is leaning heavily bullish and we’ll need to see price to confirm.
There was a positive economic piece of data released this morning and it was the Chicago PMI figure. It is nice to see there was an uptick in economic activity, but is only one data point. Given the data point there was debate over the Federal Reserve taper. No one person other than Ben Bernanke and Janet Yellen can say with certainty when the Federal Reserve will taper their QE purchases. Even a reduction of nearly 40% of the Federal Budget Deficit can’t force the Fed to taper. The market through price action will sniff out when the Fed will taper. There isn’t a need to try and figure out when.
A fun week we had with the markets. We hope you had a safe and Happy Halloween. See you next week.
