“A low” could be here, but not likely “THE low”; Tech nearing support Array ( [cookie] => 38bc7a-aa3424-337639-f96d2b-e9393b [current_usage] => 2 [max_usage] => 2 [current_usage_crypto] => 2 [max_usage_crypto] => 2 [lock] => 1 [message] => [error] => [active_member] => 0 [subscriber] => 0 [role] => [visitor_id] => 207711 [user_id] => [reason] => [method] => ) 1 and can accesss
Big breakdowns in SPX and QQQ were not followed by large breakdowns in Equal-weighted SPX and/or many of the sectors outside of Technology. Key issues seem to be the severity of the USDJPY and 2-Year yield declines, while the US Dollar began a meaningful decline given Friday’s weakness. Economic data seems to have precipitated this recent severe drop in US Dollar and Treasury yields. However, it’s hard to see long-term yields move too much lower in the short-run. Small-caps underperformed sharply this past week, but I feel that Small-caps should remain an area of focus between now and mid-September. Interestingly enough, three separate sectors rose to new all-time highs in the last week: Industrials and Financials on an Equal-weighted basis, while Healthcare’s XLV just made its own all-time high. Given the break of SPX 5390, bounces early next week likely still could face selling pressure into late next week as the Cycle composite suggests a mid-August low should be in place. However, I’m reluctant to give much credence to the idea that a larger market peak is upon us. While the “Tech Wreck” has proven violent, most of other parts of the broader market remain in good shape.
Bottom line, at present my reluctance to get too bearish has more to do with the broader market holding up in great shape, despite the “Tech Wreck” causing damage to the QQQ. I still sense that the back-half of August can work quite well and any near-term pullback can certainly be followed by a sharp rally back higher. However, given the cross-asset volatility, markets certainly have entered a more volatile time, and even on a recovery rally into September, could be vulnerable to the seasonal weakness that normally takes Stock indices lower into Election time.
At present, some minor stabilization might allow for a quick bounce Monday into Tuesday, but the extent of the negative momentum makes me reluctant to get too caught up in calling a major low just yet.


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