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“The desire to perform all the time is usually a barrier to performing over time.” – Robert Olstein
After six straight days of gains, US equity futures are poised to open lower this morning. If the S&P 500 finishes the day lower, it will be the first down day since 1/29 when the S&P 500 closed below its 50-day moving average. The data calendar is on the light side this morning. NFIB Small Business sentiment was released earlier this morning and came in lower than expected (95.0 vs 97.0) falling to its lowest level since May. Later on, we’ll get the release of the JOLTS report for December.
Be sure to check out today’s Morning Lineup for updates on the latest market news and events, earnings reports from around the world, recent moves in the dollar, a preliminary analysis of Japanese Machine Tool Orders, an update on the latest national and international COVID trends, and much more.
One of the hallmarks of a bull market is that corrections are swift and shallow, and windows of opportunity for investors on the sidelines is usually narrow. The pullback we saw in late January provides an excellent example. On January 20th, the S&P 500 closed at ‘extreme’ overbought levels which we classify as more than two standard deviations above its 50-day moving average (DMA). Seven trading days later on 1/29, the S&P 500 was down 3.7% from its high and below its 50-DMA for the first time since early November. Faster than the S&P 500 sold off from ‘extreme’ overbought levels to below its 50-DMA, though, it rebounded back to ‘extreme’ overbought levels again. Yes, just six trading days after closing below its 50-DMA for the first time since November, yesterday the S&P 500 finished the session back above its 50-DMA by more than two standard deviations.