Four things about this market before the week starts.
The Fed hiked a quarter point Wednesday, 12 to 0, and said one more is coming this year. The S&P fell to a six-week low on the press conference, then made all of it back in two sessions and closed the week at 7,650.50, up a touch. A market that absorbs its first hike in three years inside two days isn’t a broken market. It also hasn’t proven anything yet. The bounce came on volume that fell every day it rose.
The volatility market moved the risk out a month. The VIX closed at 14.8. The October VIX future closed at 18.0. That gap, 3.2 points, is the widest in our captures going back to the start of last year. The front week is priced calm and October is priced for trouble. Our own eight years of this calendar say the same thing in price: the back half of September is the soft patch, the first half of October is where it turns. The options market and the calendar agree, which happens less often than you’d think.
Underneath the index, one stock in five is holding its short-term trend and half are above the 200-day. Health care was the only group that got healthier last week. Energy, the leader since June, gave back a third of its participation with crude still at $100. The passive bid we track from institutional flow printed the highest reading in the history of our file on Friday. Big money is buying a market most stocks aren’t confirming. One of those two is going to give.
Last week’s published lean lost. The map called the break and the low. The lean was on the wrong side of the turn. Both are in the scorecard below, in full.
The plan that comes out of all this is short to say: long, small, and it has to earn the right to get bigger. One close does that. One close takes it away.
The regime, the seven levels, the lean, the rotation board, and the week’s calendar are below the line.
