Inside Markets

Yesterday, the S&P 500 (SPX) managed to close at our predetermined technical watershed level of 4567.  Closing levels above 4567 would likely result in increased bullish momentum.  

Markets are priced for a 25bp rate hike and a message that signals a pause in the hiking cycle. The June meeting resulted in a ‘hawkish skip,’ but the softer-than-expected June CPI/PPI reports should give the Fed more comfort to be patient and data dependent.

We suspended our tactical bearish bias back in early June based on improved market breadth, cyclical sector leadership and a break above technical resistance at 4200. Market breadth continues to improve and cyclical sectors lead, but at a much slower pace.

US equities are mostly higher after yesterday’s sell-off in mega-cap Tech took the Nasdaq 100 (NDX) down more than 2%, while the Dow Jones Industrial Average (DJIA) finished higher for a ninth straight session

The S&P 500 (SPX) has reached the upper end of technical resistance in the 4515-4565 range. A close above 4567 with cyclical and small cap leadership would accelerate the pain trade and extend the recent rally.

The S&P 500 (SPX) has reached the upper end of technical resistance in the 4515-4565 range. A close above 4567 with cyclical and small cap leadership would accelerate the pain trade and extend the recent rally.

The macro narrative continues to shift toward a soft landing after yesterday’s Empire Fed manufacturing index came in better than expected with big declines in prices paid and prices received.

The Fed has entered its blackout period ahead of the July 26th FOMC meeting, but former Vice Chair Clarida said it’s reasonable for markets to anticipate a rate cut by next March.

US equities are mixed with the S&P 500 (SPX) on track for a +2.7% weekly gain. The equal weight S&P 500 (RSP) and Russell 2000 (RTY) are lower after several days of outperformance. 

It’s possible that central banks may be underestimating the potential pace of global disinflation.