The bulls adopted by on the prior week’s reversal effort with final week’s 1.9% advance. Shares even hit a brand new file excessive within the course of.
Simply don’t learn an excessive amount of into the transfer. Shares are nonetheless susceptible right here, and overvalued as effectively. The market might preserve climbing from right here, however it’s going to be powerful, and harmful.
There’s additionally the not-so-small matter that the indexes actually solely began to check its main technical resistance late final week. That is when issues start getting powerful.
We’ll take a look at all of it in some element under. Let’s first take a look at the financial information that was posted final week regardless of the federal government shutdown, and what we could be listening to this week… possibly.
Financial Information Evaluation
Though the federal authorities continues to be shut down, the Census Bureau was nonetheless compelled sufficient to launch final month’s shopper inflation information on Friday. The Social Safety Administration wants it to find out and announce its official cost-of-living adjustment for the approaching yr. Though it received’t go into impact till January, most everybody actually must know now.
And it’s fairly tame. Total shopper inflation fell to a palatable 3.0%, whereas core inflation edged as much as 3.0%. That’s kind of consistent with the Federal Reserve’s longer-term goal, giving the FOMC the room it must proceed ratcheting rates of interest downward (which it’s anticipated to progressively do by subsequent yr — extra on this in a second).
Shopper, Producer Inflation Price Charts
Supply: Census Bureau, TradeStation
Observe that we didn’t get the producer inflation information for September, which isn’t mandatory to find out Social Safety’s 2026 COLA. For that matter, we didn’t hear final month’s new house gross sales final week from the Census Bureau both, though the Nationwide Affiliation of Realtors did dish out its gross sales numbers for September. Gross sales of present houses inched up somewhat to an annualized tempo of 4.06 million models, though that’s nonetheless somewhat low.
New, Present House Gross sales Charts
Supply: Census Bureau, TradeStation
And as a reminder, though we don’t have the precise determine but, economists nonetheless consider August’s surge I gross sales of latest houses was a one-off that will probably be unwound as soon as we do lastly get September’s confirmed information. Actual property demand stays somewhat subdued.
All the things else is on the grid.
Financial Information Report Calendar
Supply: Briefing.com, TradeStation
We additionally heard the third and remaining report on shopper sentiment from the College of Michigan final week, in entrance of this Tuesday’s take a look at shopper confidence from The Convention Board. The previous edged down somewhat decrease to 53.6 for the month (not proven but on the chart under), whereas the latter is predicted to do the identical this week.
Shopper Sentiment Charts
Supply: Convention Board, College of Michigan, TradeStation
There may be contrarian potential on this poor sentiment. However, in some way it doesn’t seem to be we’re fairly there but.
We’re additionally going to actually hear the S&P Case-Shiller 20-Metropolis Index replace on house costs on Tuesday, though we’ll doubtless not hear the comparable report from the FHFA on the identical day if the federal government continues to be shut down at that time. As you may recall, each have been in a little bit of a shallow hunch for just a few months now. This isn’t apt to vary a lot with August’s numbers.
House Worth Index Charts
Supply: FHFA, Commonplace & Poor’s, TradeStation
We’ll additionally get the aforementioned choice on rates of interest on Wednesday of this week… it doesn’t matter what. As of the most recent look the market says there’s a 96.7% probability of one other quarter-point minimize this time round, with nonetheless one other quarter-point minimize within the playing cards with December’s scheduled alternative to decrease charges.
On this similar vein, though it received’t be a consider Wednesday’s choice, on Friday we would get September’s private and earnings and shopper spending replace from the Bureau of Financial Evaluation. It’s anticipated to be kind of consistent with August’s numbers, that are nominal, and positively don’t power the FOMC into second-guessing any previous or future fee cuts.
Inventory Market Index Evaluation
We begin this week with a considerably zoomed-in take a look at the weekly chart of the S&P 500, since we actually want to have a look at issues with a bigger-picture perspective first. Due to final week’s 1.9% advance, the index is now at file highs. Discover the VIX additionally adopted by on the prior week’s intraweek (downward) reversal bar, which underscores the bullish argument.
S&P 500 Weekly Chart, with MACD and VIX 
Supply: TradeNavigator
Besides, the issue that’s been in place for a while now continues to be in place. That’s the sheer frothy, lofty ranges that shares are buying and selling at now. There doesn’t look like a lot room or cause for the market to proceed making beneficial properties.
And that headwind could already be blowing sufficient to place a right away finish to this bullishness. Friday’s excessive basically materialized at a technical ceiling (purple, dashed) that connects all three main highs since mid-September (marked with purple arrows on the each day chart under). The each day chart additionally reveals us there’s was by no means actually main quantity behind any of final week’s “up” days.
S&P 500 Each day Chart, with Quantity and VIX 
Supply: TradeNavigator
The each day chart of the NASDAQ Composite appears to be like about the identical. It’s bumped right into a near-term technical ceiling of its personal; the sheer span, velocity, and distance of the rally from April’s low are actually forcing a slowdown of the bullish effort… with less-aggressive increased highs; the bullish buying and selling vary is narrowing.
NASDAQ Composite Each day Chart, with Quantity and VXN
Supply: TradeNavigator
So that is irritating. The general pattern stays bullish, so we do as effectively. However, it’s not proper. It shouldn’t be taking place like this, or presently. But it’s.
The excellent news (nonetheless) is, the rally’s technical framework stays crystal clear. Each indexes have agency technical help. The NASDAQ Composite’s is the purple, dashed straight line that connects all of the lows since Might. The S&P 500’s is – at worst – the 50-day shifting common line (purple) at present at 6,595. Something below these ranges might simply begin a extra damaging selloff, offered it additionally happens when the VIX and VXN punch by their technical ceilings they didn’t truly punch by a few weeks in the past. Something lower than that, and the technical pattern stays bullish.
The looming vulnerability continues to be simple although.