As anticipated, final week the market bounced again a bit from the foremost setback suffered two Fridays in the past. As feared, it wasn’t a lot of a bounce (relative to the sheer dimension of that one-day stumble anyway). It’s simply too quickly to say issues are on the mend. The S&P 500’s 1.8% acquire for the week didn’t truly clear any main hurdles, and definitely did unwind the prior week’s loss. Shares may nonetheless simply slip into extra severe hassle from right here.
The excellent news (nonetheless) is, it’s crystal clear the place that promoting will attain some extent the place it’s going to develop into self-fueling. And it’s not too far-off from the place shares ended final week’s motion.
We’ll take a look at these ranges in some element in a second. Let’s first discuss in regards to the financial information we’re not getting, and what we would lastly get subsequent week.
Financial Information Evaluation
Information flash! The federal authorities remains to be shut down. Buyers don’t see to care a lot. They’re nonetheless shifting as if it doesn’t matter (and maybe it doesn’t). Because of the shutdown although, we didn’t hear final week’s scheduled experiences on inflation, retail gross sales, housing begins and constructing permits, and capability utilization and industrial manufacturing. We’re additionally nonetheless lacking September’s jobs report.
Every thing we did hear — which isn’t a lot — is on the grid.
Financial Information Report Calendar
Supply: Briefing.com, TradeStation
This week’s fairly mild. The truth is, the one information we’re going to get is on the actual property entrance. On Tuesday we’ll hear Thursday’s gross sales of current properties for September from the Nationwide Affiliation of Realtors, and on Friday, we would hear final month’s new dwelling gross sales information from the Census Bureau. Forecasts calling for a slight enchancment in current dwelling gross sales, though it is going to nonetheless be alarming low. In the meantime, new dwelling gross sales are anticipated to peel again from August’s unusual surge. The customer’s incentives that spurred this swell of purchases isn’t sustainable.
New, Present Residence Gross sales Charts
Supply: Census Bureau, Nationwide Assn. of Realtors, TradeStation
On Friday we’ll hear the third and last take a look at the College of Michigan’s sentiment measure. It needs to be down barely from September’s last determine, which isn’t notably encouraging.
Shopper Sentiment Charts
Supply: Convention Board, College of Michigan, TradeStation
Search for the Convention Board’s launch of shopper confidence subsequent week. It’s additionally been trending decrease, and given the backdrop, it appears unlikely that is going to vary this time round.
There’s additionally apparently some expectation that we may hear final month’s shopper inflation report on Friday of this week, or possibly even by Friday. Economists additionally appear to assume it’s going to be as agency as August’s, if not barely larger. We’ll see.
Inventory Market Index Evaluation
We’ll begin this week’s evaluation with a take a look at the day by day chart of the S&P 500, because it tells us essentially the most about what’s occurring now… and never occurring. As may have been predicted, the bulls did push again following the prior Friday’s steep selloff, by no means letting the index slip under the 50-day shifting common line (purple) at 6,564. Nonetheless, they by no means truly bought the index again above the proverbial hump… the 20-day shifting common line (blue) at 6,676. The S&P 500 briefly traded above the pivotal stage on Wednesday and Thursday, however in the end met an excessive amount of resistance. It ended up closing larger on Friday, however stays on the incorrect aspect of some too many technical ceilings.
S&P 500 Each day Chart, with Quantity and VIX 
Supply: TradeNavigator
Additionally discover that none of final week’s “up” days have been on larger quantity, whereas Wednesday’s and Thursday’s intraday setbacks have been on larger quantity.
The weekly chart places final week’s motion in additional perspective. From this vantage level we are able to nonetheless sense and even see that the bullish momentum that had been in place since April suffered a big blow two weeks in the past that wasn’t unwound final week; discover the MACD traces are nonetheless inching their method towards a bearish cross. The one factor that should occur to push the bearish effort previous the tipping level is a transfer below the rising help line (blue, dashed) that extends again to Might.
S&P 500 Weekly Chart, with MACD and VIX 
Supply: TradeNavigator
That being stated, discover the VIX peeled again from Thursday’s and Friday’s surge. It was an expiration day, which could clarify the above-average slide. Nonetheless, to the extent it wasn’t brought on by a wave of choice expiration, this pullback loosely works towards the bearish thesis right here. Maybe worry has run its course… not less than in the intervening time.
And the NASDAQ Composite’s chart seems to be nearly the identical, though it might be even a bit tighter. That’s to say, the composite fell again to a long-established rising help line (purple, dashed) that extends again to Might, however seems to be discovering a agency flooring there now. The NASDAQ’s 50-day shifting common line (purple) at 22,110 is correct under there, able to lend a serving to hand as help.
NASDAQ Composite Each day Chart, with Quantity and VXN
Supply: TradeNavigator
Even so, just like the S&P 500, there was clearly extra bearish quantity than bullish quantity from NASDAQ-listed names final week, and it’s not just like the composite dished out a decisive bullish restoration transfer. It could have merely been unable or not able to dish out any extra draw back after such a speedy and sizable selloff two Fridays in the past. The bears may have simply regrouped since then, and now stand able to take management once more early this week.
Backside line? Issues may nonetheless simply go both method from right here, largely as a result of the market remains to be simply too excessive, and overvalued. However, the technical pattern remains to be bullish.
The excellent news is, it’s changing into clearer and clearer the place a extra regarding diploma of promoting can (and sure will) begin. For the NASDAQ Composite it’s the 50-day shifting common line at present at 22,110, and for the S&P 500, it’s additionally the 50-day line (purple) at 6,564. In each instances, nonetheless, we’d really want to see the VIX and VXN transfer above their current technical ceilings to say the tide has really taken a flip for the more serious. Simply keep in mind even “for the more serious” doesn’t imply we’re getting into a full-blown bear market. It’s solely going to be beginning out as a much-needed corrective transfer, and reset of the longer-term advance.