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“Libraries should be open to all—except the censor.” – John F Kennedy

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Futures are little changed this morning but biased to the positive side, as the direction of the market is listless with little in the way of economic data or major earnings reports to speak of. Perhaps the most notable move has been in crude oil, where WTI is down over 1% after falling through its 200-day moving average yesterday.

Yesterday’s gain for the Nasdaq was the index’s eighth straight positive day in a row and the longest streak of consecutive gains since November 2021.  In the process of this 8.3% rally, the Nasdaq has also managed to reclaim both its 50 and 200-day moving averages (DMA)- levels it was below before the streak started.  While the Nasdaq has managed to trade back above both of its key moving averages, it finished the day right at the downtrend that has been in place since the summer highs, so that is a potential roadblock as the rally looks to keep going.

Eight-day winning streaks are nothing out of the ordinary for the Nasdaq.  Since the index’s inception back in 1971, there have been 86 prior winning streaks of at least eight days with the longest, back in 1979, stretching to 19 days.  In the current streak, we’re not even halfway there.  What is much more uncommon for the Nasdaq is to start an eight-day winning streak below both its 50 and 200-DMAs and by the eighth day of the streak to trade back above both of those levels.  Since 1971, there have only been ten prior periods where that occurred (red lines in the chart).

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See what’s driving market performance around the world in today’s Morning Lineup.  Bespoke’s Morning Lineup is the best way to start your trading day.  Read it now by starting a two-week trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“Man is the only creature who refuses to be what he is.” – Albert Camus

Below is some introductory commentary of today’s Morning Lineup.  Start a two-week trial to Bespoke Premium to get full access.  

And on the seventh day, the market rested.  After six straight days of the rally looks like it’s taking a day off as equities, crude oil, gold, bitcoin, and even treasury yields are lower.  Some of the concerns this morning can be tied to comments made by Minneapolis Fed President Kashkari who said he cannot rule out further rate hikes. On the economic calendar, it’s another light session this morning as will be the case most of the week even as the quantity of earnings reports remains very busy.

Over in Europe, the major indices are all down between 0.1% and 0.5%.  PPI for the region was down an incredible 12.4%, and what was even more incredible was that it was a smaller decline than expected!  In Germany, construction data was weaker than expected and showed the weakest level of activity since April 2020.

While momentum in the market pulled back yesterday, last week’s rally was accompanied by exceptionally strong breadth.  As an example, the S&P 500’s 5-day advance/decline (A/D) line surged to +1,476 as of Friday which ranked as the 7th highest reading dating all the way back to 1990. The chart below shows historical readings in the 5-day A/D line, and the reason it only goes back to 2008 is that before that there were no readings that ever exceeded +1,400.  That’s due in at least part to the fact that around that time is when the popularity of ETFs really started to explode creating what has become the current all-or-nothing nature of the market.

The chart below shows the performance of the S&P 500 going back to 2008 on a log scale, and the red dots show every other time that the 5-day A/D line reached +1,400 or higher.  As shown, these types of readings occurred at all different phases of the market cycle. While the late 2021 occurrence right near the market top sticks out like a big pimple, other occurrences don’t look nearly as ominous.

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