Friday’s session saw Consumer Discretionary outperform thanks to solid gains from Amazon (AMZN) and Chipotle (CMG) helping the sector to be the best performer so far this month.

Energy got hit the hardest and is struggling month-to-date, but continues to lead since the July peak.

Small caps are struggling to pick up momentum relative to large caps, and weakness across growth and value indexes are not helping.

The S&P 500 has shed $4.0 trillion in value since its top in July.

Market breadth for Friday was atrocious with new lows mounting faster and faster.  The new highs to new lows ratio on for the Nasdaq are the greatest since September 2022. This is beginning to be a contrarian buy signal.  But the index must find a way back above the 200-day moving average.

Market Breadth	NYSE	NASDAQ
Advancers	749	1,382
Decliners	2,137	2,880
New Highs	20	20
New Lows	369	606
Up Volume	849.27 million	1.67 billion
Down Volume	3.09 billion	2.48 billion

Earnings Season

So far, earnings have surprised almost 3 times more than in the second quarter.

It will be another big week for earnings and big caps such as Advanced Micro Devices (AMD), Apple (AAPL) and Qualcomm (QCOM) reporting. 

The FOMC has its two day meeting beginning tomorrow. Right now, the CME FedWatch model is flashing no additional rate hikes, and the first-rate cut is next June.  At this point, investors should be rooting for a long pause, rather than rat cuts.

Today’s Session

Futures are pointing to a higher open, The S&P 500 is higher by 0.6% after falling into correction territory last week, helped in part to earnings from McDonald’s (MCD), which is up about 3% after beating expectations, and the Nasdaq has gained 0.7%.

Since peaking in early July, the S&P 500 has shed $4.0 trillion in value.

According to Ned Davis Research, it has been 660 days since the S&P 500 established a new all-time high.  The market has rallied an average of 13.1% in the years following those with zero new highs.

Let’s see if this is the start to the rally.  

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