I was impressed with yesterday’s action. I continue to impress upon investors that while the bias is to the downside, the overall fundamental story is getting better, and that is a recipe for a major snapback rally that will probably retest the all-time high.

More Advancers

The factor board was all green, and that’s a step in the right direction, but there must be more “winners.”  The S&P 500 saw 59% advancers, while the S&P 400 and S&P 600 saw 70% advancers. The buy signal comes with 80% advancers.

The focus was on small-cap value and revenue.

Sand Kicked in Face…Again

Just a week ago, we were raving about the possibility that software (IGV) names have escaped the clutches of artificial intelligence (AI), and their demise had been exaggerated.

It reminded me of the old Charles Atlas comic book ads, where the skinny kid got bullied on the beach after asking a big jerk to stop kicking sand in his face and his date's. The big jerk manhandled the kid and humiliated him in front of his date.

Ultimately, the kid beefed up and returned to the beach to teach the big jerk a lesson.

We thought that script was playing out in software. Then yesterday, OpenAI released a cybersecurity product, and Google (GOOG/L) did as well, and it took a heavy toll on cybersecurity names.

Suddenly, software (IGV) is below the trendline point that attracted many buyers over the past week.

After the Close

After the close, software company Snowflake Inc. (SNOW) released its financials, and the stock erupted higher.

The Secret?

Focus on the AI products like that skinny kid focused on his physical fitness routine. The moral of the story is that there will be software “victims” of AI, and some names will incorporate it enough to increase business relevance.  

AVGO

Broadcom (AVGO) also posted results that, for the most part, crushed the Street, but guidance was just so-so. The stock moved lower, then climbed back into the green before falling again.

Sellers & Buyers

Last week, Bank of America’s (BAC) hedge funds and institutional investors came back into the market big time.

Guess Who Sold?

Their retail investors (private clients) were sellers.

If you are getting antsy, get antsy to buy, not to take unnecessary losses.

Today’s Session

A nice rebound in bullish sentiment shows investors know the market is oversold.

Underscore how quickly the Fear & Greed Index has swung into fear.

This morning, global bond yields eased a little, and economic data didn’t move the needle at the Fed.

Meanwhile, Fed members are laying down markers.

Fed Members Telegraph Next Move

Yesterday, NY Fed President Williams spoke in favor of holding off on a rate hike this month.  Considered one of the most influential members of the Federal Reserve (the New York Fed President is a permanent voter), Williams carries a lot of weight, and he was joined this morning by Fed Governor Chris Waller, who has become a wildcard after leaning dovish.

Waller is leaning toward not cutting.  Moreover, he had intriguing comments on guidance and reactions.

Equity futures turned higher immediately, underscoring how much of the rate-hike anxiety is holding this market back.

Comments

I love the research that is offered by Charles and the gang! Rick Kramer on 9/3/2026 11:06:33 AM

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