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“Let’s roll.” – Todd Beamer
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Today is an emotional day for all Americans, but for some more than others. Whether you are old enough to remember 9/11 or not, let it remind us that what’s routine now can change in an instant, and the only time that’s guaranteed is right now.
What’s that we see on our screens? Equity futures are higher, Treasury yields are lower, and WTI crude oil is back below $100? What’s going on, and can we just call it a day here? It’s certainly a positive tone in the markets after four days in a row of losses, but whether those gains can hold into the weekend will be determined entirely by the August CPI report, which is about to hit the tape at 8:30 Eastern. Besides that report, the only other report on the calendar is the Michigan Sentiment report at 10 AM.
Asian equities finished the week on a down note, with the Nikkei down close to 2%, South Korea down slightly less, and Hong Kong and China both down around 1%. PPI in Japan unexpectedly declined 0.2% versus a forecast of no change.
European equities are looking to finish a down week on a positive note, and heading into the release of the August CPI, the STOXX 600 is up 0.6%, and all the major benchmark indices in the region are up by similar amounts. UK GDP rose 0.4% in July versus forecasts for no change, and along with that stronger-than-expected report, Industrial Production and Manufacturing Production came in better than expected.
With the S&P 500 sitting on four straight days of losses, breadth, which was already weak, has only gotten worse. We’ll start with the S&P 500’s 10-day advance/decline line, which has experienced a steep decline over the last week. At yesterday’s level of -1,186, it’s the weakest reading since March and one of only a few times when the reading got this weak or weaker.
The S&P 500’s cumulative A/D line has also deteriorated much more steeply than its price level. While the S&P 500 closed yesterday down near its lowest level since early August, the cumulative A/D line hasn’t been this weak since late June. The level of weakness in the cumulative A/D line is nowhere nearly as deep as the type of weakness we saw in the late 1990s, but it’s something to watch in the weeks and months ahead. It’s far from a red light at this point but more like a blinking yellow.
The S&P 500 only closed slightly below its 50-DMA yesterday, but the equal-weight index has been much weaker. It first closed below its 50-DMA on Tuesday, and on each of the last three trading days it has closed at or near its lows for the day. The fact that oil prices seem to rise incessantly these days has impacted the broader market as concerns over the economy start to rise.
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