Market update 9.7.24

This week’s market activity trended notably downward, as we anticipated in last week’s update. Price movements for SPY and DIA aligned with our model’s projected one standard deviation variance. While QQQ slightly exceeded this range, it’s not entirely unexpected, as a one standard deviation move is expected around 68% of the time in a normal distribution. Many television commentators seemed puzzled by the Tuesday sell-off, citing a lack of clear catalysts. However, having tracked our indicators for over a decade, we know that this kind of movement often occurs without an obvious trigger. That’s the advantage of our model—we frequently spot potential market shifts that others miss. While no forecast is flawless, our predictions are typically quite close.

Interestingly, the market has quickly recalibrated after this recent downturn. Our indicators are nearing signals of a bullish turn, although they haven’t fully aligned just yet. We anticipate a significant bullish move, likely to coincide with the upcoming September FED meeting. Whether the rate cut is 25 or 50 basis points, it seems poised to be met with strong enthusiasm. We will continue to monitor our indicators closely to see if this scenario continues to unfold as expected.

As we look ahead to next week, we expect further downside pressure or potentially choppy trading as the market works through the final stages of this pullback.

In the table above, our model's predicted change indicates a slightly negative bias for all three indexes over the next seven days.

The whisker plot above shows an improving trend as we look out 14 days or more into the future.

The bar chart above shows a significant improvement in the probability of positive return after the 14-day mark. We think this is aligned with the FOMC rate cut decision planned for mid-September.