Market Recap
The bond selloff continued to start the week, with $TLT making fresh lows before finally finding a bid and bouncing on Thursday. The shift was helped by cooler inflation data, with PCE coming in below expectations on Wednesday.
Friday’s jobs report added further support to the idea that the Fed can pause. Nonfarm payrolls increased by just 29,000 in September, well below expectations, while unemployment ticked up to 4.2%.
Fed rate hike expectations fell sharply throughout the week. The probability of an October hike was around 70% earlier in the week, falling to roughly 37% after PCE and around 15-20% following Friday’s jobs report. An October hike now looks increasingly unlikely, although another hike later in the year remains possible.
$QQQ responded well to the shift in rates and closed the week at a new all-time high. $SPY remains below its highs and continues to underperform tech, while $IWM also bounced alongside bonds from Thursday as some pressure came off the more rate-sensitive areas of the market.
Watchlist
Weak breadth has consistently been an underlying issue in the market recently, although this started to improve towards the end of the week as more stocks began participating in the move higher.
Optical computing stocks showed some momentum early on Thursday which continued into Friday.
$LITE was the first to make new all-time highs and remains the de facto leader of the group.
$AAOI, $AXTI, $GLW, $COHR and $MXL are the other main names to keep on watch if momentum in the group continues.
$MU has been consolidating in a range near the highs, with a breakout above the $1,110 area as the next potential pivot.
$SKHY is a recent IPO trading close to all-time highs, with the recent high around $200 providing a clear level to watch.
Semis remain strong overall, although some of the largest names are not necessarily in the most actionable spots.
$NVDA made a new intraday all-time high on Friday but failed to hold the move into the close. Despite being near highs, it continues to lack the sustained momentum we have often seen from other leading stocks, perhaps unsurprising given its sheer size and market cap.
$AMD is also at all-time highs, but isn’t in a particularly actionable spot after gapping higher with the broader market on Friday.
$INTC remains another name to watch within the group after its recent strength.
Crypto continues to consolidate. Despite Friday’s failed push higher, both $BTC and $ETH remain within their ranges and the broader consolidation has yet to break.
$SDEV is also on watch as a small-cap crypto treasury stock that is starting to become extended, potentially setting it up as a short if the move becomes parabolic.
Closing Thoughts
$QQQ breaking out to new all-time highs is objectively bullish and keeps the broader trend intact.
The market continues to be led primarily by AI and tech stocks, unsurprisingly, while many other areas remain relatively weak. Financials and small caps have continued to lag, with $IWM and other rate-sensitive areas particularly impacted by the recent move higher in yields.
Overall, the market appears to be in a cautiously bullish regime for now. Breadth is still far from ideal, but more daily charts are beginning to shape up and participate, which is an encouraging sign heading into the new week.
If you enjoyed this read, please consider leaving a like on the post, and let me know in the comments if I missed anything or what you’re watching for this week!
P.S.
If you haven’t checked out the Valhalla Portal yet, it’s where I track catalysts, setups, and market activity in real time - a live feed of everything that moves the tape, built for the community. I’ll be doing a dedicated post soon walking through all the features in detail, so stay tuned for that. In the meantime, you can check it out here: