AT40 = 53.0% of stocks are trading above their respective 40-day moving averages (DMAs)
AT200 = 51.1% of stocks are trading above their respective 200DMAs
VIX = 10.7 (down 11.5%)
Short-term Trading Call: neutral (see below for caveats)
Commentary
I had no idea that the previous tensions in the stock market fully priced in the likely economic damage from Hurricane Irma, the possible turmoil of budget ceiling battles in the U.S. political machinery, and/or the potential for another missile test from North Korea over the weekend. Yet, pundits seemed to use some combination of relief from these three catalysts to explain the market’s big rally on September 11th – a day on which Americans take pause to honor those lost 16 years ago to terrorism and to forget (briefly) our internal differences and strife.
The S&P 500 (SPY) gained 1.1% to a new all-time high. One more day of buying will force me to switch my trading call from neutral to cautiously bullish. I will only reluctantly make this change given the calendar is still in the seasonally weak period for the stock market. The Nasdaq gained 1.1% and the PowerShares QQQ Trust (QQQ) gained 1.2%. AT40 (T2108), the percentage of stocks trading above their respective 40-day moving averages (DMAs), definitively confirmed the bullishness of the day by running all the way up from 44.9% to 53.0%.
The S&P 500 (SPY) made a statement by confirming 50DMA support and soaring to a new all-time high.
The PowerShares QQQ Trust (QQQ) rallied just short of a new all-time high as it fights to hold onto the uptrend through its upper-Bollinger Bands (BBs).
Like QQQ, the NASDAQ rallied just short of its all-time high.
The 30-Day Fed Fund Futures provided another clear example of the burst of euphoria that came out of the day’s trading. I checked the futures early in the morning about 5 hours before U.S. trading began and then again 10 hours after trading ended. Before trading began, the market fell just short of believing in a 50/50 chance of the timing for the NEXT rate hike from the U.S. Federal Reserve to come in June or August of 2018. After good tidings swept through the market, those odds surged such that the timing moved forward to March, 2018. The impact sent U.S. treasury yields higher, the U.S. dollar off its latest bottoming attempt, and precious metals down to the bottom of uptrend channels.
