Friday was more active than I had expected, and the selling put Thursday's recovery into perspective. The Nasdaq came under renewed pressure, while small caps gave back their rebound.
Equal-weight stocks held up considerably better, and Treasuries kept most of their gains.
Market Commentary
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Read more →Thursday gave the bullish arguments from the last two updates a little more substance. Equal-weight stocks recovered Wednesday's loss, small caps participated, and Treasuries continued higher.
The Dollar also pulled back after reaching its remaining upside projections.
CPI gave the indexes the impulse we were waiting for, and the move was lower. The inflation report did little to help the bullish case, but the market response was more mixed than the decline in stocks alone would suggest.
In the last update, I listed several bullish arguments despite my bearish leaning. Wednesday put those arguments to the test. RSP lost ground but held up better than the S&P 500, while TLT recovered from its opening decline and finished higher.
Both deserve a closer look.
The S&P 500 has barely moved since the last update. Looking at the individual markets, however, there has been quite a bit more going on. Energy continued higher, financials struggled to build on their recovery, and the equal-weighted S&P managed another small gain.
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