Project Calm from the Feds Bounces Stocks Away from Oversold – The Market Breadth

calm

Stock Market Commentary: The Feds delivered on Sunday as Janet Yellen promised. The FDIC, the Treasury, and the Federal Reserve joined forces to offer emergency financial backing and reassurances for the banking system, a kind of “Project Calm” to project calm. The Federal Reserve even came up with a new acronym that looks like a … Read more

A Quick End to the Inflation Trade

quick end

My idea for a trade on the U.S. CPI (Consumer Price Index) report seemed like a great idea last month. Up to that point, the market experienced sharp swings based on the directional gap between the actual inflation readings and expected inflation. I used the Cleveland Federal Reserve’s “nowcasting” to generate an approximate trading model. … Read more

How to Measure A CPI Surprise and Its Impact on Stocks

surprise (Credit: Surprise!!! 4/365 by Benson Kua from Flickr)

Stock Market and Inflation: Understanding the Impact of the Consumer Price Index (CPI) Report Soon after the Federal Reserve started tightening monetary policy, the stock market started acting like the Fed will see evidence that inflation is actually not a problem and thus plateau or pivot on rate hikes. Yet, the Fed said no in … Read more

How Home Builder Stocks Trade In A Seasonal Pattern

seasonal pattern home builders (Credit: Housing Market by free pictures of money on Flickr)

{This analysis was updated on January 1, 2025 with the latest data, more clarity, and some corrections. Please see “How Home Builder Stocks Trade In A Seasonal Pattern (2025 Update)“} Introduction The U.S. housing market follows a seasonal pattern. The spring selling season represents the year’s peak of home sales. During this time, households try … Read more

Another Bearish Failure At Overbought Levels – The Market Breadth

failure (credit: Good example of Crossfit Weight lifting - In Crossfit Always lift until you reach the point of Failure or you tear something by CrossfitPaleoDietFitnessClasses from Flickr)

Stock Market Commentary: The people of China have now suffered three years of various draconian lockdowns meant to contain the spread of COVID-19. The latest lockdowns remind a suffering populace that there remains no end in sight for this extended kind of public health authoritarianism. Apparently, the frustrations are boiling over enough to motivate people … Read more

A Reluctant Return to Overbought Trading Conditions – The Market Breadth

reluctant (Credit: Reluctant Goose by judy_and_ed on Flickr)

Stock Market Commentary: The holiday-shortened week brought a reluctant return to overbought trading conditions. Buyers nudged the indices higher inch by inch after Monday’s slightly down open. The Fed-speak that returned the stock market to bearish trading conditions faded out of view. Looking ahead, the promise of seasonal strength once again beckons reluctant buyers. If … Read more

The United States Oil Fund and the Monday Blues

United States Oil Fund Monday Blues (Credit: Sunset on an empire by Jim_Nix on Flickr)

The United States Oil Fund, LP (USO) has declined six straight Mondays and seven of the last eight. Prior to this streak, USO only declined 39% of Mondays in 2022 (where the market was trading on the prior Friday). Overall, the split is essentially 50/50 with 19 Monday blues versus 20 Monday gains. In other … Read more

Did the Bear Market Warm Up For A Comeback? – The Market Breadth

Did the Bear Market Warm Up For A Comeback? (Credit: Bear Stretches by aaaceto)

Stock Market Commentary: Now I see why there was so little fanfare about the end of the bear market. Last week’s trading looks like a warm-up for a bear market comeback. The S&P 500 and the iShares Russell 2000 ETF (IWM) printed bearish confirmations of resistance at their respective 200-day moving averages (DMAs) (the blue … Read more

Inflation Readout Drives A Fakeout and Ends One Bear Market – The Market Breadth

Stock Market Commentary: The stock market threw a big fakeout, the biggest I have seen in a long time. Just yesterday, a synchronized failure at key resistance levels from the major indices combined with a drop from overbought conditions to convince me to get (cautiously) bearish on the stock market. The read on July CPI … Read more

Resolution After A One-Day Overbought Period – The Market Breadth

Stock Market Commentary: The stock market took one more day to get resolution on the technical signals flashing from market breadth. A drop from overbought conditions triggered a bearish market signal. Failures at important resistance from the S&P 500, the NASDAQ, and IWM each reinforced the bearish signal. However, the relatively mild trading action and … Read more