Good morning,
Let’s start by looking backward. The rally over the past 9 days has been everything bulls would hope for.
Indexes and major sectors have overcome important resistance levels, breadth has been strong, and the rally has been led by technology and cyclicals, while defensives are up but firmly lagging.
Based on all this, it is hard to argue the S&P 500 is likely to revisit its August 5 lows.
Over the next 10 days, 2 major events will determine how quickly the index could make a new high.
The first is a plethora of Fedspeak this week, including the release of the FOMC minutes on Wednesday and the Jackson Hole Symposium on Thursday and Friday.
While the world not ending over the yen carry trade might be a net positive, it does give the dummies at the Fed an opportunity to continue to strangle the economy until it does.
The 10-year found support at 3.8% again last week and a move up through 4.01% (this week’s level to watch) would likely be for the wrong reasons.
The second event is Nvidia earnings next Wednesday. This doesn’t necessarily affect the market ex-tech, but as Nvidia goes, so has gone the S&P 500 Index.
Nvidia has now pushed through all major resistance levels except all-time highs and I would expect the stock to be testing them by next week.
How that report and call go will likely determine whether we fail at $140 again or break out for another leg higher. Of course, the technicals can’t predict the future or tell us how next week will play out but there isn’t anything particularly ominous in the chart right now, and it so far bears a striking resemblance to the March-May correction that resolved higher.
This week’s report will review:
Last week’s bullish action
What’s worked since the low
Why semiconductors are the key going forward
Rates ahead of Jackson Hole
Small-caps
Gold
Japan
and more!
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