At the start of trading yesterday, the market had a strong out-the-gate fade, but it was still an up day with wide participation. The China news helped drive Materials (XLB) names higher, and Micron Technology (MU) ignited Technology (XLK).

XLB rocketed – breaking out to all-time highs and picking up momentum.

Market Breadth

Small-caps and mid-caps finally caught a bid.

Advancers & Decliners

Advancers generally outpaced decliners two to one across the market except for mid-caps, which saw three-quarters of its companies advance.

There is a saying that “A rising tide lifts all boats.”  In this case, it's hard for big-money folks paid to invest to remain on the sidelines, and they are too embarrassed to chase those names they explained to clients weren’t worth the risk at much lower levels.

There are pockets of value, but most stocks that are “cheap” right now are cheap for a reason.

Watch Volume

When measuring conviction, I love volume, especially when it's significantly above the daily average.

Not only was the up volume to down higher, but significant overall volume also points at improved conviction.

Market Breadth	NYSE	NASDAQ
Advancers	1,769	2,734
Decliners	1,023	1,521
New Highs	271	266
New Lows	28	120
Up Volume	2.55 billion	3.71 billion
Down Volume	1.03 billion	1.41 billion

Today’s Session

Key economic data out this morning allows for a positive spin and legitimate concern.

There has been no better tool for keeping a narrative, particularly bullish moving, even when unexpected or unavoidable bumps in the road occur.

It's called ‘Wall Street Consensus.”

We all have had something happen to us, where we braced for impact.  Once the dust settles, we open our eyes, look around, move our limbs, and say: "whew, that wasn’t as bad as I thought it would be.”

Acknowledging that the outcome was bad, but it could have been worse.

We then use that to justify or mitigate why we were in that vulnerable situation in the first place, or deny responsibility.  Perhaps more problematic, we often use that phrase to keep doing things that are too risky because it’s easier or potentially more profitable.

This morning, critical inflation data came in below the Wall Street consensus, so that’s good news, right?  Inflation is not good news, and while it's not the end of the world, it reminds us that maybe the Fed hasn’t whipped inflation.

Core inflation plateaued, and now it's edging higher. Who cares? Was consensus higher? This is a glaring yellow, maybe a red flag.

Meanwhile, income and spending grew less than expected, pointing to consumer fatigue and concern. 

Comments

I appreciate your insight and over time have started to pay more attention to what and how a given market consensus hit or miss influences the outcome. Still learning what to pay attention to around the news in a given stock held. That's on me if it does and even if at a greater loss and it becomes dead money and eventually sold, lessons learned sometimes come at a high cost. Can't avoid them all just yet, but getting better and not taking the losses personally. Terry Dowler on 9/27/2024 10:55:10 AM

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