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September 29, 2023 – The market has shown significant weakness from an “over bought” condition. Next week, it would follow, a rebound and then a “test” of recent support levels. We have broken the “Up Channel” and also my predefined “Trading Range” . The important question is: does this market consolidate and move back higher or head back down? Both are possibilities. (and Congress doesn’t help !)
Friday was a major expiration of quarterly put options and there were quite a few of those. I did see the possible beginning of some “nibble buying”, but that could also be just short covering. Market breath remains negative but has been improving just a little. Clues to what may happen next would likely be shown in the US Dollar and Treasury Bonds. The chart below shows the market (S&P 500), Treasury Bonds (10 year) and the US Dollar. Note how they interact. A strong Dollar is not great for the market and a weak Bond is not either. Money coming into the Dollar from outside and high interest rates are a head wind for a market that is not cheap to begin with.
The Short-Term Sector Strength table is shown at www.Special-Risk.net
Not much strength in that table unless you’re a Dollar or Oil Bull. That’s it for now. I’m heavy in Cash and watching the Dollar, Treasury Bonds and Precious Metals for a sign that maybe a move lasting higher could be in the cards . . . or not. ………… Tom ……………