Friday closed higher across the US board. The S&P 500 gained 0.73%, the Nasdaq 100 1.0% to its highest close in more than a year, the Dow 0.49% and the Russell 2000 0.94%, with the chip index up 2.4% to its highest close since July. The tone was set before the open. Treasuries held Thursday’s gains, the market priced only 25 basis points of Fed hikes for the rest of the year, Brent fell on reports of stockpile releases, and Europe was up more than 1% in early trading with industrials, basic resources and chips leading. Asia was mixed, the Hang Seng lost 2.6% and mainland China was closed for the holiday. Nike’s outlook disappointed, the Tokyo CPI ran hot, and the September jobs report was due with the Street at 90,000 new jobs.
The ceiling calls of the past two weeks are collecting their price answers. Corn trades 8.3% below its September 21 high after the bull exit at the bearish maximum, the bulls leave the field and the upswing appears finished. Natural gas, read at -93 with bull fatigue on Wednesday, seven points from the bearish maximum and with the upward move grinding to a halt, now posts that bearish maximum of -100 with a bull exit of its own. The price sits 8% under its September 24 high, seven weeks after its floor call near 2.80, and that completes the round trip. The Hang Seng’s ceiling window, open since early September, has left the alarm range with the index at its lowest close since early July, 7.8% under its August high. On the floor side the chip index has run 17.5% since the September 16 scan read its decline as overstretched and closed Friday at its highest since July.
What holds today’s board together is that the ceiling side keeps paying while the first floor windows begin to move. The Russell 2000’s reading has advanced to bear fatigue, the decline is running out of steam, with two higher closes off Wednesday’s low behind it. The real estate sector enters the floor side at +63, just inside the alarm range, with bear exhaustion, the sellers have overreached with no counter-move yet, eight weeks after a ceiling reading that paid 8.7%. The whole rate complex sits in the alarm range at once, the yields on the ceiling side and the long-bond ETF on the floor side, with Thursday’s data showing the first stall below Wednesday’s highs.
Our daily analysis filters roughly 45 markets through a cycle consensus engine. Each asset receives a Consensus Score from -100 to +100, the model’s summary reading for a possible turn, where positive values mark potential cyclical bottoms (a time window where a decline could end) and negative values potential cyclical tops (a window where a rise could stall or reverse). Readings beyond ±60 enter the critical zone, a critical reading at which the cycle model raises the alarm for a possible turn. Let’s take a closer look.
