Daily Market Commentary

We got some upside follow through yesterday to Wednesday's huge positive reversal day, just as the textbooks would suggest might happen. The S&P 500 has been up four days in a row as it is reaching up to the previous highs, trying to get back last week's losses. The charts look good but the Fed is looming. A breakout to new highs or a sell the news reaction are the two real potential outcomes, and either one may be big.

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If you enjoy "get me out at any price" mornings, followed by "fear of missing out" buying in the afternoon, Wednesday was the day for you. The Dow saw a 900+ point positive reversal and losses of 1% to 2% turned into 1% to 2% gains in many indices. Bond yields fell early but bounced back as stocks rallied. The positive outside reversal day is a bullish development for stocks.

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The Dow was down modestly yesterday, and small caps were flat, but the S&P 500 and Nasdaq added onto Monday's rally yesterday with decent gains. There are a lot of catalysts this week, as there always seems to be, so a 2 day bounce after a pullback could easily get tested today. Bonds were up as we saw new lows in the 10-year Treasury Yield.

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Stocks played Turnaround Tuesday on a Monday this week as the S&P 500 and small caps broke a 4-day losing streak and posted solid gains yesterday. The pullback off the high to Friday's low retraced about 50% of the gains from the early August low to the late August high in both the C and S-funds, so is that enough or is there more pain to follow? Bonds were up as yields eased down again.

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Stocks took another beating on Friday as September's bearish reputation is still intact after 4 straight losing days for the S&P 500 and the small caps to start the month. The jobs report missed estimates by about 20K while the unemployment rate came inline with the 4.2% estimate, and that was a tick lower than the prior month. The negative revisions of prior reports made the report a little worse than it appeared and that led to the sell off.

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