Yesterday’s session was doomed from the start, ironically because good news was bad news. I think the focus on initial jobless claims isn’t capturing where the labor market strain is coming from, and while it was a stark improvement, the latest revision to the second-quarter Gross Domestic Product (GDP) is still old news. I think it speaks more to the effect of wealth than the economic health of individual households. 

 During the session, growth sectors stumbled, but so did Consumer Staples (XLP), Health Care (XLV), and Utilities (XLU).

Breadth was universally dismal.

There was never a sense of panic, but three consecutive down sessions made everyone take notice. The Fear & Greed Index has retreated into “neutral.”

Retail Investors Stir the Drink

Individual investors' sentiment remained at 41.7% bullishness, but bearishness pulled back to 39.2% from 42.4%. The more the market pulls back, the more upbeat investors should become. There is a valuation argument, but it only matters when there is a sense of panic.

Retail investors have become a significant force in the options market, but it is undeniable that the fortunes of Technology (XLK) stocks fuel their enthusiasm.

Today, we’ll get the latest on inflation.

Today’s Session

This morning's inflation data came in line with the consensus, which is a good thing, considering the chorus of people who suggested the number would be hotter than expected.

The market has held well above the 50-day moving average, and that is always a positive sign.