Breaking News
Black Friday SALE: Up to 54% off InvestingPro! Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

The Correction Is Over As Market Rises. Time To Buy Stocks?

By Michael LebowitzStock MarketsSep 27, 2021 07:19AM ET
www.investing.com/analysis/the-correction-is-over-as-market-rises-time-to-buy-stocks-200603167
The Correction Is Over As Market Rises. Time To Buy Stocks?
By Michael Lebowitz   |  Sep 27, 2021 07:19AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

The correction is now officially over as the market regained its 50-day moving average leading us to buy stocks. With the market finishing in the green on Friday after a large gap down to open the week such confirmed the bullish trend is still intact. This week, chock full of economic data and Fed speakers, will be important to fully determine whether the key support will hold.

What To Watch Today

Economy

  • 8:30 a.m. ET: Durable goods orders, August preliminary (0.6% expected, -0.1% in July)
  • 8:30 a.m. ET: Durable goods excluding transportation, August preliminary (0.5% expected, 0.8% in July)
  • 8:30 a.m. ET: Non-defense capital goods orders excluding aircraft, August preliminary (0.3% expected, 0.1% in July)
  • 8:30 a.m. ET: Non-defense capital goods orders excluding aircraft, August preliminary (0.9% in July)
  • 10:30 a.m. ET: Dallas Fed Manufacturing Activity Index, September (11.0 expected, 9.0 in July)

Earnings

  • 4:15 p.m. ET: Aurora Cannabis (NASDAQ:ACB) is expected to report adjusted losses of 27 Canadian dollars on revenue of 56.38 million Canadian dollars

Politics

  • “The next few days will be a time of intensity” is how U.S. House of Representatives Speaker Nancy Pelosi put it to her members over the weekend. Lawmakers return to Washington today with votes likely this week on averting a government shutdown, lifting the debt ceiling, the bipartisan infrastructure deal, and the multitrillion dollar budget reconciliation package. First up, Senate Majority Leader Chuck Schumer is pushing for a vote at 5:30 p.m. ET on the first two items but Republicans have vowed to block the effort.
  • Today is also the deadline Senator Pat Toomey (R-Pa) set for ideas on how Washington should regulate cryptocurrency. The issue could then come up again tomorrow as U.S. Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell are set to testify before Toomey and the Senate Banking Committee.

Market Back On A Buy Signal To Close Out The Quarter

Portfolio managers will be repositioning portfolios to be in the “right stocks” as the quarter end reporting approaches. As noted in this past weekend’s newsletter:

“Notably, two essential things occurred this week. The market regained its 50-dma and triggered our RIAPRO Money Flow “buy” signal. Both suggest that bulls have regained control, and we could see some follow-through buying next week.”

SPY Daily Chart
SPY Daily Chart

If the MACD signal turns this week, such will confirm the current “money flow” signal suggesting higher prices for stocks near term. Such is why we increased our exposures last week, and will look to return to full allocation levels quickly.

Stocks To Buy

The following are the top 10 S&P 500 companies with the strongest relative strength.

Strongest Momentum Stocks
Strongest Momentum Stocks

Here are the top 10 strongest S&P 500 companies on MACD buy signals.

Top 10 Strongest S&P 500 Companies On MACD
Top 10 Strongest S&P 500 Companies On MACD

New Home Sales

August new home sales came in above expectations at 740k (+1.5% MoM) versus a consensus of 708k. The median new home sales price grew to $390,900, which represents a massive increase of +20.1% YoY.

New Home Sales
New Home Sales

China Crackdown Continues

Cryptocurrencies are selling off following news that the PBOC has declared all cryptocurrency transactions illegal. According to ZeroHedge, “In a statement the People’s Bank of China said the latest notice was to further prevent the risks surrounding crypto trading and to maintain national security and social stability.” Prices have previously dipped and recovered from attempts by the CCP to squash digital currencies. Will this time be different?

Cryptocurrencies Sell-Off
Cryptocurrencies Sell-Off

Costco Earnings

Costco Wholesale Corp (NASDAQ:COST) reported earnings for its fourth fiscal quarter yesterday after the close. GAAP EPS of $3.76 comfortably beat expectations of $3.58. Fourth quarter revenue came in at $62.7B (+17.4% YoY) versus the consensus estimate of $61.5B. Sales growth was primarily driven by comparable store growth of 15.5% YoY, with double digit growth in all operating segments. We hold a 1.5% position in the Equity Model.

Costco Earnings Chart
Costco Earnings Chart

Bonds Get Routed

Bond yields rose significantly yesterday, following a decent performance after the Fed policy statement on Wednesday. While too early to tell if yesterday’s move is just technical, it may be an early warning from bond investors that the Fed is behind the curve in tapering. Market implied five-year inflation expectations rose from 2.41% to 2.48%, supporting our concern.

Today bonds are being punished further, with the 10-Y yield pushed up 4 bps to 1.45% by mid-morning. If the 10-Y yield remains elevated through the close, it will have reached its highest point quarter-to-date.

Did Ending Jobless Benefits Help?

The Wall Street Journal helps answer our question. Per their article, States That Cut Unemployment Benefits Saw Limited Impact on Job Growth:

“States that ended enhanced federal unemployment benefits early have so far seen about the same job growth as states that continued offering the pandemic-related extra aid, according to a Wall Street Journal analysis and economists.” The graph below shows there is no discernable difference in job growth between states that ended benefits during the summer and the states in which they just expired.

Growth Comparision
Growth Comparision

Fed Speakers

Starting today and through next week, Fed members will make their thoughts known through a plethora of speaking engagements.

Fed Speakers
Fed Speakers
The Correction Is Over As Market Rises. Time To Buy Stocks?
 

Related Articles

Trading Point
Can Anything Stop The Stock Market? By Trading Point  - Nov 26, 2021

Stock markets have gone on an absolute rampage this year. The problem is that the factors that initially fueled this rally - heavy government spending and endless central bank...

Anna Coulling
Is This A Fake Move In U.S. Markets? By Anna Coulling - Nov 26, 2021 2

As US markets open in the midst of the Thanksgiving holiday season, it’s been a traumatic start to the end of the week, with all three indices trading sharply lower, with the Dow...

The Correction Is Over As Market Rises. Time To Buy Stocks?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email