The summer correction has finished an A-B-C correction pattern if the 09/27/23 low holds from this point on.  The 10-year treasury yield has made a new high at 4.688% last Thursday 09/28/23.  The not so bad inflation data released last Friday caused the 10-year treasury yield to gap down on Friday morning.  The tug of war between the inflation and treasury yield has caused extreme volatility in the bond market.  But the stock market behaved relatively well.  All three indexes made a low on 09/27/23, one day ahead of the 10-year treasury yield high.

The leading AI stocks also made a low on 09/21/23, four trading days before indexes, which is a minor bullish divergence.

Seasonally speaking, the 09/27/23 low is much more reliable than the 08/18/23 low.  Also all three indexes just finished an A-B-C correction pattern.

The small to mid cap growth stocks and Russell 2000 small cap stocks are not performing well in 2023.  The performing stocks are the mega cap tech stocks and a handful of AI stocks in 2023.  This is not a real bull market that all stocks participate.  In a real bull market, all stocks rise with the bullish tide.  The super picky bull market in 2023 are caused by the very tight monetary conditions since the Fed is so determined to fight inflation at the expense of slowing down the economy.

That being said about the backdrop of the 2023 bull market, we don’t expect the nature of this rally to change until there is a change of the Fed policies.  The stock market (mega cap tech stocks plus AI stocks) most likely will continue to rally till the year end while the economy continues to weaken.

2024 is an election year which we don’t expect the Fed to go crazy to cause a crash.  So the bull market started in October 2022 probably will last into the election in November 2024.  That is a very long time for a super picky bull market.

Below is the S&P 500 daily chart.

The S&P 500 didn’t quite reach its 200-day moving average at 4199.  But it got pretty close at 4238.  It has been 28 weeks since the 3/17/23 low.  It’s about time for the weekly cycle to turn up.

The government shut down was averted by a last minute measure.  So probably the market will use this news as excuse to rally out of this weekly cycle.  The Sunday night futures market is rallying based on this news.