Yesterday was a methodical session that saw major indices trade with an upside bias and in narrow ranges.

• NASDAQ Composite: +0.56%
• Russell 2000: +0.40%
• S&P 500: +0.38%

Once again, it was Technology (XLK) leading the charge, but the big decline in Utilities (XLK) was just as noticeable. Defensive sectors continue to be underwhelming, and the shift to Consumer Staples (XLP) as a foxhole has also lost its luster. While the pricing power has been impressive, but volume is declining, and there isn’t any more room for price increases.

Bottom Fishing

Chasing performance has been a winning approach, but I’m seeing more bottom fishing.  Four out of the top ten advancers are stocks changing hands near 52-week lows (arrows). And big moves in mega-cap!

However, the week is building up for tomorrow’s jobs report to take on greater importance. If the number is benign, we could see the market surge. The S&P 500 sees huge resistance at 4,600, which makes a close above that level monumental.

The CBOE Market Volatility Index, a.k.a., the “Fear Index,” looks as cool as the other side of the pillow. It was supposed to be a sell signal. But in 2023, it's been a perfect proxy of a stock market that hasn’t exhibited any signs of panic since March.

Generals at 50

The most important mega-cap names have climbed back above their respective 50-day moving averages, except Microsoft (MSFT), which could happen today.

Portfolio Approach

We added a new position to Consumer Discretionary and closed a position in Materials in the Hotline Model Portfolio.

Today’ Session

Initial jobless claims continue to ease, coming in at 228,000 against the consensus of 235,000.

Personal Income & Spending

I am shocked people spent so much money in July, although I suspect most of it was because of the inflated prices on staples and services. To see the savings rate swoon to 3.5% from 4.7% is a giant red flag.

Core PCE edged higher from a year ago to 4.2%, which was in-line with consensus.

 

Comments

I love your comment "cool as the other side of the pillow". I haven't heard that since I was a lot younger than I am now. JAMES L MCCOY on 8/31/2023 9:45:29 AM

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