Market Rally Breadth and Correction Risk
Key Questions
What drove the market surge on June 19 after the FOMC selloff?
Futures surged after Micron's blowout earnings and in-line PCE data, with Nasdaq futures rising 2%. Semiconductors led the bounce while Apple slumped.
What is the current distribution day count on Nasdaq and its implication?
The distribution day count on Nasdaq remains at 6, which is considered bearish. This signals ongoing selling pressure despite the rally.
Are markets rotating away from tech and growth stocks?
Rotation into value, small caps, and equal-weight continues amid questions about the AI spending trade. The Dow has outperformed while Nasdaq lags.
What technical levels and events are influencing volatility?
S&P 500 technical support at 7322 is being tested with CTA selling pressure unresolved. Triple witching this week is adding to volatility.
How are broader market sentiment and optimism affecting the S&P 500?
S&P 500 optimism is at record highs, which some strategists view as a potential problem. The index ended mixed after the FOMC with focus on earnings and data.
The S&P 500, Nasdaq, and Dow rebounded on September 11 after a four-day decline, with the Nasdaq modestly leading and the S&P 500 holding above 7,670 intraday. The bounce suggests dip-buying but remains fragile because of narrow leadership, the lost 50-day average, elevated SKEW, negative gamma, September seasonality, and possible CTA selling. Higher oil or yields could quickly revive downside pressure.