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Morning stock market summary

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Unlike most other days recently, futures have been rallying as we approach the opening bell.  While the bounce started before the ADP employment report, it picked up steam after that release came in weaker than expected.  Now, we just need to get through Factory Orders, Durable Goods, and most importantly, ISM Services at 10 AM.

After two months of steadily lower trending markets, the number of sector ETFs trading above their 50-day moving average (DMA) is finally down to zero as the Energy sector ETF (XLE) surrendered that level this week.  While XLE is less than 0.1% below its 50-DMA, every other sector ETF is trading at least 2% below its 50-DMA (Communication Services), and Utilities and Real Estate are both more than 9% below their respective 50-DMAs.

So, when was the last time this happened?  The chart below shows the running total number of sector ETFs above their 50-DMAs, and while it got close to zero in the spring, the last time it was zero was exactly a year ago yesterday (10/3/22), and before that, in the summer of 2022. In the entire post-COVID era, this current period is just the sixth time that a sell-off has resulted in every sector trading below its 50-DMA.

Looking at the longer-term 200-DMA, the only sectors currently trading above that level are Energy (4.2%), Consumer Discretionary (2.1%), Communication Services (8.6%), and Technology (5.7%). Like the 50-DMA, the last time every sector ETF was below their respective 200-DMA was briefly last fall and before that in the summer.  In the post-COVID period, though, the only other period where every sector was below its 200-DMA was during the initial market crash when the virus first shut down the US economy. With two sectors still trading more than 5% above their 200-DMAs, it would take a considerable amount of more selling to get that reading back to zero.  Something no one’s portfolio wants to see.

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