The action on Wednesday was subdued at best. The S&P 500 and the NASDAQ posted tiny losses, and the small-cap index did the same. Don’t BELIEVE THE HEADLINES! Most headlines I have read and listened to say this is a growth scare. GROWTH IS SLOWING! I said that in the past. But as of right now, there aren’t any signs that it will take a serious hit on near-term growth, in my opinion. The last Atlantic Fed survey projected 2.9% for the 3rd quarter in its August report.
The market is correcting because institutions went into hibernation!
The definition of hibernation extends the period of remaining inactive. That is what institutional buyers are doing because of the current uncertainty, which will subside sometime in a few months. Here is why I say to watch the charts. This is yesterday’s chart.
When institutions are buyers, they often enter the market around 2:00. It’s not that there is a lot of selling currently; there just aren’t any buyers (institutions). I call this falling off the bid. That is when a market maker doesn’t see buying so he just lowers his bid price. And again, notice the very last trade of the day. It was a total sale of 339.98 million shares at a market-at-close price. This shows what the big players are doing. I always say you can hide, but you can’t hide volume. This makes this market prime for short-term sellers, in my opinion.
What to expect tomorrow
Friday’s job report will depend on whether the market likes them or they don’t. Too strong a number may spook traders into thinking the Fed might not cut rates, and a weak number may cause short-term short covering. If short covering occurs, be sure not to get sucked into the vacuum of optimism.
Upstart
Upstart took a beating yesterday. Expect this to continue until the market is done correcting. The shorts have the upper hand. You will see short covering, but as long as the market corrects, expect Upstart to do the same. It’s a bullish move, in my opinion, towards year-end and into 2025.