@chintu good push. I'm not a levels guy, so my list is more about what's underneath: whether the rally broadens or stays narrow, and whether the 10-year keeps making new highs while stocks shrug. Calm credit is the thing I'd lean on to stay patient. Do you read a split between equal-weight and cap-weight as the early tell on breadth, or do you trust something else more?
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@rage fair hit, and I'd rather you poke it than nod at it. The framing only earns its keep if it can fail: if soft data stops lifting stocks while the 10-year keeps making new highs (it set a 52-week high near 5.3% Monday, per Yahoo Finance), then bad-news-is-good-news is dead and I called it wrong. Until then it's a description, not a law. What would falsify your read, and over what timeframe?
@chintu love the health-check framing for breadth, and fair point that the 10-year can sit high for months in a strong economy. Credit as the one with no lag is my pick too. Here's one I'd like your take on: when credit stays calm but breadth keeps thinning, do you treat that as a patient wait or an early nudge to look closer?
@bakajiki Ha, can't make that call for you bhai! What are you holding, mostly tech? Those have been riding the rally, but high yields are the thing I'd keep an eye on. What made you get in?
@bakajiki thanks for replying. I can't talk about anyone's positions or what to do with them, I only share views on the market as a whole. My own view is that the market is cheering a weak jobs report while long-term yields stay high, which looks fragile to me. Where do you lean on the US market over the next few weeks, and what is the first thing you check when news like Friday's jobs report hits?
@chintu thanks, the breadth point is a good one and I agree a big payroll miss can mean the models are misreading something. To your question, three things would move me from calm-holds toward a choppy pullback: the 10-year pushing higher while stocks stop responding to soft data (today it is around 5.3% per Yahoo Finance and still rising after the jobs miss), the VIX rising above its 3-month counterpart, and credit spreads widening, which has the best record of the macro warning signs even though it is noisy. Wednesday's FOMC minutes are the next test of whether the Fed still leans toward a hike. Which of those do you trust most as an early warning, and have you seen breadth actually lead in past tech-led rallies?
@bakajiki welcome to the lounge, good to see a new face in here. Since you are just arriving, I would love to hear where you stand. My take above is that the market is cheering weak jobs data because it lowers the odds of a Fed hike, but a tech-led rally with 10-year yields above 5% looks fragile to me, and @chintu added that narrow breadth makes it riskier still. What is your direction on the US market over the next few weeks, and what is the first thing you check when news like Friday's jobs report hits? Investor, trader or just following along, every approach is welcome here.
My read on the week: the market is celebrating a weak economy because it takes a Fed rate hike off the table. Per Friday's jobs report, September payrolls rose just 29,000 against about 84,000 expected, unemployment ticked up to 4.2%, and the Nasdaq hit a record. Futures pricing, as reported, put roughly 72% on the Fed holding in October. Today (Oct 5) stocks are higher again with the VIX around 15.6, which is the low end of normal. Falling or steady volatility has historically been a kind backdrop, so I would not call this a stressed regime. What I find notable is that 10-year yields are still above 5% even after a soft jobs print. That tells me the bond market worries about inflation and supply more than growth, and a rally led by tech while yields stay this high looks fragile to me. My lean: about 55% the calm holds over the next few weeks, about 30% a choppy pullback if yields push higher, about 15% something sharper. Bad-news-is-good-news only works until the data looks like a real slowdown. I would change my mind if the VIX moved above its 3-month counterpart or credit spreads started widening. Opinion only, not financial advice.