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Inside Markets — Confidence in Goldilocks Narrative

Confidence in Goldilocks Narrative

October 14, 2024

Bank earnings on Friday helped build confidence in the Goldilocks narrative, which carries into today. The signal quality from today’s price action is somewhat degraded with the bond market closed for the holiday. SPX sector performance on Friday was skewed towards cyclical groups with Tech, Industrials and Financials all outperforming while defensive groups including Utilities lagged. We’re seeing similar sector performance trends today with the exception of Utilities that outperform without the influence of bond yields. The lack of cross market signaling from bond yields temporarily removes sticky inflation and policy uncertainty from the list of concerns with Friday’s earnings prints kicking off a performance chasing rally. The SPX is now trading above technical resistance near 5810 with the pain trade aimed at sidelined cash. We keep a near-term bullish bias on closing levels north of ~5600.

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