The Wall Of Worry
I could tell you about US debt and deficits, European economic weakness, UK's macro travails, China's consumption struggles. The list goes on: bond market rout, Hormuz, tariffs, AI capex uncertainty, private credit, circular financing. But you know this already, and so does the market. And it prices both the good and the bad efficiently. Friday's post-payrolls rally showed exactly that. The Teflon market is back.
- Both at the index level and major tech names, are posed to challenge highs. Early days, but momentum is returning in tech names. The market is fickle - trailing stops are your friend (see below for key levels).
- Markets have climbed a “wall of worry”, not the setup that leads to sustained-sell-offs. Arguably, the bearish narrative is in the price.
- The market largely shrugged off strong payrolls - 16th Sep FOMC is still a coin-flip - we lean towards a “hold”. This week’s inflation readings (PPI on 10th, CPI on 11th) will set the tone.
Nasdaq 100 Futures - Renko Chart (1mn/ 2% brick)
After spending a couple of months on the bench, tech and the markets appear ready to shake off summer blues. Broader indices have successfully defended support levels and moving averages. Major large caps are all showing signs of positive momentum.
S&P 500 - Must Defend and Blue Skies Levels
7600 is a solid support level for bulls to remain in business. Above 7800, it’s blue skies.
What’s the risk? Failure to defend 7400 negates bullish agenda.
Tech vs. S&P - Can It Breakout?
Are we clearly out of the woods - not completely. Breadth needs to catch up, indices need to reclaim highs and tech needs to resume leadership. It’s early days, but signs are promising. Markets can be fickle so set trailing stops and add to positions as highs get taken out.
Levels to Watch (need more? email investmentideas@lighthouse-canton.com)
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