Thin Volume, Negative Seasonality Bring Market Momentum Down
After a big positive on the heels of Fed commentary last week, traders gave a little back.
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After the big positive reaction to Jerome Powell on Friday, a little give-back by the market on Monday isn’t a surprise and isn’t negative. This is an odd week as volume is very thin as the summer season comes to an end in front of the Labor Day holiday next Monday.
While the bulls prefer to see upside follow through when there is a breakout move, the more important issue is holding above key technical levels and consolidating some gains. We are in the middle of negative seasonality, and that probably held back some of the momentum buyers that normally would be more inclined to chase.
Another factor is that there isn’t any notable news flow until the Nvidia NVDA earnings report on Wednesday, and then the PCE inflation report on Friday morning. So we just have a bit of positioning as investors look ahead to September, which is historically the weakest month of the year.
As I suggested on Monday morning, the focus should be on managing positions and looking for technical setups rather than trying to guess how the indices might move. There is no real edge to market timing at the moment as we await some catalysts.
The S&P 500 and all the indices closed near the low point of the day as investors lost interest and moved to the sidelines. Boredom is the primary emotion at work right now.
Have a good evening. I’ll see you tomorrow.
At the time of publication, DePorre had no positions in any securities mentioned.
