The markets had a great week. The S&P 500 started the week at approximately 5,150 and closed at 5,344, a gain of roughly 3.7%. The buy-side volume was not impressive on Thursday, and it was dismal on Friday. On the NASDAQ, it was the same story for the week. The gains were solid, but true buy-side volume, which one would like to see when a short-term bottom is made, was absent. The buy-side volume was anemic, in my opinion. This is the relief rally I was talking about in my previous post. I do not see the NASDAQ passing the 17,250–17,500 level any time soon or the S&P 500 passing above the levels of 5,400–5,450.
There could be further relief (to the upside) this week, as it is action-packed with economic data that currently has Wall Street and your pundits bug-eyed. The continued relief rally will mostly be spurred upon further by short covering and retail investors who believe the correction is over. Raise cash if you get a chance. Tuesday is the producer price index, and Wednesday is the consumer price index. I see this (CPI) getting the most market attention because, I tame CPI would expect the Federal Reserve to cut interest rates by as much as ½ basis point. A bad (hot) CPI would lead the market to believe the Federal Reserve is not going to lower interest rates, and the market would react in a horrible, near-jerk reaction to the downside. No matter how good the data is, I expect it to sell into strength on both indexes at the approximate levels I mentioned above.
Small Cap Russell 2000
The Russell 2000 also had a good week. It was up 4.38%. It had a great, almost 4-week run. It is also in the correction phase. Right now, market conditions and market psychology are not favorable. This small-cap index will react and often overreact when either of its larger relatives (NASDAQ, S&P 500) comes under serious selling pressure. Make a shopping list of stocks to buy when the current correction runs its course. Several of mine are small and midcap stocks. I will release my picks when I finish their reports.
Upstart update
Upstart had a great week, up 70%, and that’s not a misprint! While some would like to put superhero status on that move, its continued rally will most likely become muted when the selling resumes on the larger indexes. I think the shorts are freighted and will most likely be covered in the CPI report. As I stated, I believe the shorts will continue to be burned. But the big burn most likely comes at year-end and into 2025. Read my research report and it will tell you why.