Tuesday closed modestly lower. The S&P 500 lost 0.16%, the equal-weight index 0.11%, the Dow 0.25%, the Nasdaq 0.09% and the Russell 2000 0.35%. The news flow leaned the bulls’ way. New York Fed President Williams said more tightening will be needed but saw no urgency after the September hike, which the market read as an October skip, and the two-year yield fell 4.5 basis points while the ten-year and the thirty-year rose 1 and 4 basis points. The market now prices 34 basis points of hikes for the rest of the year with October at roughly even odds. Brent sank 2.6% to $102.50 on data showing healthy oil exports from the Middle East despite the war, gold rose 1.45% and silver 1.25%, and Carnival and CarMax delivered strong reports. Tech, capital goods, cruise lines and utilities led, while financials, steel, healthcare, staples and energy lagged, and market breadth stays thin. JOLTS came in cooler and consumer confidence softer than forecast. Wednesday brings the August PCE and Micron’s report after the close, Friday the September jobs report, where the Street expects a slowdown to 90,000 new jobs from 162,000.
The ceiling side has started to pay. Natural gas stood at the model’s bullish maximum on August 12 near 2.80, a floor reading carried on the record through mid-August and late August, and the price ran 17.6% to its September 24 high of 3.297. Saturday’s ceiling reading has since been answered with an 8.7% drop from that high. Corn took out the 527.50 mark named in the same edition on Monday, trades 3.9% below its September 21 high, and its reading has normalized out of the zone. The financials sit 7.5% below the high they set the day after the September 3 maximum, at their lowest close since the start of August. One reading on the record did not hold, the long-bond ETF’s floor call of July 29 sits 5.6% underwater as the ETF returns to the floor side today.
The single thread today is a market where the ceiling side is paying and the floor side is still being stretched. Solana returns to the bearish maximum of -100 with a bull exit, the buyers step back and the rise no longer carries, two sessions after its high. The Russell 2000, the euro futures and the Shanghai Composite hold their floor windows with bear exhaustion, the decline is stretched like an overextended rubber band, and all three closed Tuesday at or near their lowest levels since August. The rate complex shows the same picture from both sides. The ten-year yield’s ceiling window holds at -87 on Monday’s data, and the long-bond ETF enters the floor side at +67 after its lowest close since August, two readings that describe the same overstretched bond selloff.
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.
