Market at a Glance - 7/27/2023
By: Christopher Mistal
July 27, 2023
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Market at a Glance
7/27/2023: Dow 35282.72 | S&P 4537.41 | NASDAQ 14050.11 | Russell 2K 1954.90 | NYSE 16270.60 | Value Line Arith 9658.51
Seasonal: Bearish. August is the worst DJIA and second worst S&P 500, NASDAQ, and Russell 2000 month over the last 35 years, 1988-2022 with average performance ranging from 0.1% by NASDAQ to a –0.9% loss by DJIA. In pre-election years, August improves modestly based upon average performance, #8 DJIA, #9 S&P 500, #10 NASDAQ and Russell 2000. 
Fundamental: Not bad. Q2 GDP, released earlier today, came in better than expected at 2.4%. This is an improvement over Q1 suggesting the economy is accelerating again. Inflation metrics are generally encouraging as the trend lower has remained intact, but year-over-year comparisons are going to be tougher going forward. Oil’s quiet climb higher this month also adds pressure to future readings. Corporate earnings have been generally favorable against an arguably low bar. Employment data has been solid with the unemployment rate at 3.6%.
Technical: Mixed. DJIA, S&P 500 and NASDAQ all traded at new recovery highs in July. NASDAQ fizzled just after mid-month essentially right on cue as its historical Midyear Rally ended. DJIA stormed out with a 13 straight day winning streak (tied for second best ever) while S&P 500 largely drifted slightly higher. Today’s reversal, if not shaken off quickly, could be the start of a typical summer pullback.
Monetary: 5.25 – 5.50%. As expected, the Fed raised another 0.25% at its July meeting this week. Whether or not that will be the last increase is still unknown and will largely depend on the trajectory of inflation metrics. Year-ago inflation comparisons are going to get tougher and the path to the Fed’s stated 2% inflation objective remains unclear. 
Sentiment: Frothy. According to Investor’s Intelligence Advisors Sentiment survey Bullish advisors stand at 55.6%. Correction advisors are at 25.0% while Bearish advisors numbered 19.4% as of their July 26 release. Bullish sentiment has returned to the caution zone. It could drift higher still if the market quickly shakes off today’s reversal. Nonetheless, the conditions for a typical summer correction are beginning to make an appearance.