It was tough sledding all session long as would-be buyers waited for weak hands to close positions yesterday, but the rebound buoyed weak hands, so they held. Three safe haven sectors finished in the green and Energy (XLE) showed a noticeable decline.

Breadth was bearish, but not overwhelmingly bearish, and the overall volume was light. It's late August for sure.

Market Breadth	NYSE	NASDAQ
Advancers	962	1,525
Decliners	1,840	2,658
New Highs	147	135
New Lows	22	72
Up Volume	664.4 million	2.34 billion
Down Volume	1.54 billion	2.30 billion

Heat Map & Market Factors

Nvidia (NVDA) gave up gains, even as more firms rekindled the love. Software stocks continue to languish in the shadow of hardware.

The continued hammering of small-caps reinforces my contention that they popped in July on strong polling numbers for Donald Trump, or more so than the notion of Fed rate cuts.

The rebound remains intact as long as the S&P 500 (SPX) holds above its 50-day moving average.

And the NASDAQ Composite looks fine as well after a record breaking recovery from a correction.

Supreme Confident

There is an aura of cockiness in the air.

Nobody is short.

And the CBOE Options Put/Call Ratio (CPCE) is out of this world confident.

Rate Cuts Coming

Historically, the stock market was down an average of 23.5% for the first 195 days after the first Fed rate cut.

However, the key is Fed cuts that come too late to fend off a recession over the ensuing twelve months. When there is a soft landing, the market does well.

Labor Market Woes

I’ve been saying for a couple of weeks that the labor market is far worse than the financial media is reporting (sticking with headlines is a huge mistake).

More Fed officials are now saying as much. Yesterday, it was Fed’s Bowman who, only two weekends ago, suggested the economy was too strong for a September Fed rate cut.

Today, there will be revisions to the job numbers.

It could be brutal.

It will be ignored, but it will be a better reflection of Main Street than all the happy talk.

Today’s Session

I am waiting for the FOMC minutes and that employment adjustment.  The stock of the morning is Target (TGT), which will be cheered on as evidence of strong consumer demand, but it is a story of easier comparisons to a year ago and deeper discounting.

The average transaction amount declined more than expected while the guidance put the stock over the hump.

Mortgage applications, especially purchases, were a disaster. I suspect this factor could encourage the Fed to cut 50 bps when they meet in September.

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