Cypher: I know this steak doesn’t exist... Ignorance is bliss | The Matrix

The Street has to know that last Friday's jobs report was suspect, even more than usual, as even fewer surveys were returned in time for the release. Still, there was nothing but jubilation as nine S&P 500 sectors rallied, and it was green across extended factors.

Market Breadth

Market breadth was fantastic on Friday, especially the up to down volume on the New York Stock Exchange (NYSE) and the NASDAQ Composite.

Market Breadth	NYSE	NASDAQ
Advancers	1,761	2,851
Decliners	1,041	1,329
New Highs	164	154
New Lows	15	95
Up Volume	2.1 billion	3.27 billion
Down Volume	739.16 million	1.32 billion

Weekly Breadth

On the week, however, breadth was decidedly bearish in most categories.

Highlights:

• New highs to lows on the NYSE reflect a move to so-called quality names.
• Up (advancing) volume to down on the NASDAQ Composite.

Lowlights:

• There are far more declining stocks than advancers, which is more evidence this is a stock picker's market.

Valuations

For all the talk about how “expensive” the market has become, a look under the hood only sees three sectors trading above their 10-year average price-to-earnings (P/E) ratio. Interestingly, Technology (XLK), Utilities (XLU), and Health Care (XLV) are all trading below their average price-to-earnings-to-growth (PEG) ratio.

Earnings season kicks off on Friday. The market expects year-over-year growth to slow in the first and second quarters.

But the Street is also expecting earnings to accelerate into next year. 

This is what I mean when discussing controlling the narrative and expectations.  The setup is for companies to beat watered-down earnings estimates and raise guidance. The financial media will cheer!

Treacherous Anniversary

Today is the first anniversary of one of the most heinous crimes against humanity in recent decades.

Our thoughts and prayers are with the people of Israel as we also brace for the retaliatory strike against Iran.

Today’s Session

The market begins the week on the doorstep of “extreme greed” which usually feeds on itself until it gets to a frenzy, but the market will start the session under pressure. 

There is a lot of excitement coming into the week, maybe that could be the Achilles heel for the market.  Certainly, the Goldilocks scenario is being pushed by the Street as the rally narrative has now swung back to a “strong” economy from an accommodative Federal Reserve.

I prefer a rally based on organic economic growth rather than printing money.

The biggest headline before the open is the ten-year yield back above 4.0%. The higher it moves, the cloudier the Goldilocks scenario becomes as talk of inflation returns.

Comments

I'm not real confident that just because the feds drop down the interest rate once that will make everything rosy! Most people are broke!!! Lorin Kenfield on 10/7/2024 11:14:53 AM

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