[Chart courtesy of MarketWatch.com]

1. Moving the markets

For a change, an early rally maintained its momentum throughout the session, despite a temporary mid-day pullback, with two of the three major indexes finally eking out a gain, following five days of losses. The Nasdaq trailed and closed slightly in the red, after dancing around its unchanged line all day.

Small Caps dipped but “value” ripped, with RPV gaining a solid +1.56% after nibbling at its trailing sell stop last Friday.

Still, today’s bounce back was subdued and a far cry from convincing traders that the bullish theme is back on. After all, we are in the middle of one of the historically most volatile months, during which anything is possible. The S&P 500 was saved only by late-session bidding, which pulled the index out of the red.

Spraying to all fields:

Bond yields dropped, as nervousness over the upcoming debt ceiling debacle moved front and center.

The US Dollar bounced without clear direction but managed to hang on to modest gains.

Gold popped and dropped but ended slightly higher yet still short of recapturing its $1,800 level.

Inflation is here to stay, despite jawboning to the contrary, as the Commodity Spot Index rallied to a 10-year high.  

This week’s posting schedule will be slightly different due to me being out of town on Friday. You can see the latest update here.

[Chart courtesy of MarketWatch.com]

1. Moving the markets

It was a third day in a row of red numbers for the Dow and S&P 500 with the indicators meandering and looking for a base to support the bullish theme. While the three major indexes bounced off the lows for the day, it was not enough to instill confidence in the bears returning the baton back to the bulls.

The economic outlook was foremost on traders’ minds, but since we are in September, known to be one of the most volatile months of the year, more bumpiness may be in the cards. Questionable growth prospects combined with Fed policy, as well as the legislative agendas (cough debt ceiling, cough), may keep buyers in check.

Adding to that the insanity, as ZeroHege called it, that there are now a record 2.2 million more job openings than unemployed workers, makes you scratch your head wondering what kind of an upside-down world we are living in.

Bonds did well, with yields dropping, as the 10-year auction went better than expected with their yield moving back to unchanged for the week.

That should have given Gold an assist, but it was prevented by the US Dollar continuing to surge mid-session but giving up some of its gains at the close.

In the end, the losses for the major indexes were minor, but it remains unclear whether there is more downside to come. Your guess is as good as mine.

[Chart courtesy of MarketWatch.com]

1. Moving the markets

The same old anxieties were moved to the front burner again, namely what the delta variant’s impact might be on the economic reopening. At least that’s the headline news, but looking under the hood for the real reason, it appears to me the fact that 7 million people lost their extra unemployment benefits over the weekend might be closer to the truth.

Not helping the markets, and putting traders in a sour mood, was Goldman Sachs’ (GS) economic outlook downgrade, in which they reduced their annual growth estimate for 2021 to 5.7% from 6.5% and below the consensus of 6.2%. As a side note, GS mentioned that fading fiscal stimulus might be a headwind as well.

As a result, red numbers prevailed across the board with bonds dropping as yields rose, and the major indexes slumping, except for the Nasdaq, which eked out a small gain. The US Dollar ripped and had its best day in 3 weeks, as the rest of the markets dipped.

The dollars surge proved to be a problem for gold, which got hammered and lost its $1,800 level again.  

I agree with ZeroHedge’s comment that “for over a year, US financial conditions have done nothing but get easier and easier and actual US economic data has done nothing but get worse and worse than expectations.”

That’s why I believe that the real economy will now show up and must prove itself, unless “stimmy checks” of gigantic proportions are enacted again.

Just food for thought.