What Happened: Last week ended negative with mega-cap and technology stocks regaining strength into week-end.
Remember This: “Markets had embedded substantial optimism in early September, with the valuation of the S&P 500 at the highest level in 20 years and sentiment at extreme highs, setting the stage for a natural period of consolidation,” noted Mark Hackett, chief of investment research for Nationwide.
"Investors are now struggling to find a positive catalyst, as the prospect for fiscal stimulus fades, economic data begin to reflect rising coronavirus cases and earnings season remains a month away.”
Pictured: Profile chart of the Micro E-mini S&P 500 Futures
Broad-market equity indices ended lower with the S&P 500 correcting as low as $3,200.
Recapping Last Week’s Action: Monday's test of the $3,200 high-volume area offered responsive buyers an opportunity to get in at favorable prices. Buying continued through Tuesday, before resisting an area of resting liquidity at $3,300.
After disappointments in business activity data and stimulus talks, on heavy-volume and supportive delta, Wednesday's liquidation erased the entire week’s gains. Alongside improvements in home sale data, buyers in mega-caps and technology led the market higher, through Friday's close, away from value.
Overall, in the bigger picture, the market is churning above $3,200, the site of a large high-volume area that denotes the market’s recent perception of value. When prices trade to a high-volume area, on a swing-up auction, then trade should slow allowing responsive longs a good place to enter. Should prices trade and spend time below this area, then perceptions have changed and longs are no longer favorable, at least in the near term.
Scroll to the bottom for non-profile charts.
John Authers, a Bloomberg columnist, suggested gold is falling due to a rise in real yields.
Simply put, the theory that the Federal Reserve exhausted itself has buoyed real yields, which have an inverse relationship to metals.
S&P 500 E-mini Futures (ES) | SPDR S&P 500 ETF Trust /zigman2/quotes/209901640/composite SPY -1.04%
Gold Futures (GC) | SPDR Gold Trust /zigman2/quotes/200593176/composite GLD +0.46%
Crude Oil (CL) | United States Oil Fund LP /zigman2/quotes/203483736/composite USO -1.37% | Invesco DB Oil Fund /zigman2/quotes/202740135/composite DBO -1.38% | United States 12 Month Oil Fund /zigman2/quotes/209867783/composite USL -1.02%
Treasury Bonds (ZB) | iShares 20+ Year Treasury Bond /zigman2/quotes/206026314/composite TLT -0.99%
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