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I was thinking about the market and what is potentially behind this stupid rally, and at heart, this seems like nothing more than an oversold bounce, given a lot of bond market dislocation last week. Bonds have started to settle down.
Today we will get the ISM services, and estimates are for a reading of 56. The ADP job report is also expected to show 200,000 new jobs in September. But the most important data will be the jobs report on Friday, with jobs expected to rise by 263,000 and an unemployment rate of 3.7%.
So this data is going to have an impact one way or another. My thinking is that rates are closer to their lows at this point.
Looking at the S&P 500, there are many reasons to think this rally ends around 3,800 or goes higher to around 3,950. At this point, I can’t come up with enough to feel the rally extends to 3,950. Additionally, if it went all the way to 3,950, my five wave count lower would be invalidated. So, I am sticking with my view for an S&P 500 to head lower to 3,500.
At this point, the rally has been a 38.5% retracement of wave three down.
At this point, I’m more willing to bet that the 10-year yield doesn’t have too much further fall. This would mean equity values are too high, and if the ERP rises, it will be due to stock prices tumbling.
Headline inflation should fall back on Wednesday Food inflation should fall back rapidly Headline inflation should fall below 2% in April or May Services inflation should fall...
US markets retreated once more ahead of a week where the words, rather than the actions, of the Federal Reserve will take centre stage. The Fed’s two-day policy meeting will begin...
Week Ahead, March 18-22nd MON: Chinese Retail Sales (Feb), EZ Final CPI (Feb) TUE: BoJ Announcement, RBA Announcement; German ZEW Survey (Mar), Canadian CPI (Feb) WED: FOMC...
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