To The Moon

If you look at Tue, 08 Aug trading (see above), you will find that all 3 indexes came off morning lows at closing time.

However, that was not the case for Wed, 09 Aug trading.

This this time the indexes faded significantly into the close, losing ground.

Indexes’ Losses:

(1) Dow Jones Industrial Average: -0.54% (-191.13 to 35,125.36)

• It is trading just above its 21-day-exponential moving average (ema).

• It sits comfortably above its 50-day.

• Advancing issues outnumbered declining ones by a “1.04 to 1” ratio.

(2) S&P 500: -0.70% (-31.67 to 4,467.71).

• The index is getting close to its 50-day & 10-week lines but has not touched them yet.

• The 21-day line is still acting as resistance.

• S&P 500’s Wed decline was mainly due to chip stocks dragging tech lower.

• Of the S&P 500 companies, there were 15 new 52-week highs & 7 new 52-week lows.

(3) Nasdaq: 1.17% (-162.31 to 13,722.02).

• The index closed below its 50-day moving average for the first time since early 2023.

• It is also below its 10-week lines, though not decisively.

• Declining issues dwarfed advancing ones by a “1.45 to 1” ratio, favoring decliners.

• Nasdaq Composite recorded 54 new 52-week highs and 160 new 52-week lows.

Summary:

• This is a critical time for US stock market rally, that has been under growing pressure over the past week.

• Any further losses would likely trigger a shift to a market correction.

• Overall, market breadth has weakened over the past few trading sessions, especially on the Nasdaq.

US Market Wednesday Decline - Catalyst:

US Consumer Price Index (CPI) July data (official) release has been singled out as the main cause for market decline.

Despite media’s coverage of CPI forecast to “death” already, nothing beats hearing it straight from the horse’s mouth I supposed.

Just in case: (reader is unaware)

• July inflation is projected to rise to 3.3% versus last month’s 3%.

• Core inflation (exclude Food & Energy) is predicted to remain status quo at 4.8% level.

• The “forecasted data” pales in comparison to the 8.5% annual CPI registered a year ago.

• Some analysts believe that the July CPI data is not expected to be a game-changer for the Fed rate hike outlook.

• Owing that the Fed relies on the Personal Consumption Expenditure IPCE) data over the CPI.

My Viewpoint :

• The market rally had been nearing a critical test.

• It is now clearly underway.

• It is not going well, but it is not over (not yet to me!).

• Artificial Intelligence (AI) stocks have the market “excited all over” again and has been leading the market lately.

• Whether they are facing big challenges or simply breaking down; it is not clear yet.

• And there is a difference between institutional-quality leaders like $NVIDIA Corp(NVDA)$, $Taiwan Semiconductor Manufacturing(TSM)$ etc.

• Could these stocks offer buying opportunities soon?

• It is not clear yet because (see below),

Newly "erected" obstacle between the 2 Giants.

• I wondered if this could be the other factor that caused US market to tumble.

• I think there will be wide ranging repercussions should the latest restriction/s become enforced.

• The “Great Divide” is only going to further polarize the 2 countries on all fronts - geopolitics, business, technology, trade etc.

Perhaps it “pays” to be patient and “wise” to wait for more details to be revealed?

• Do you think US market will react “positively” to the CPI data?

• Do you think AI and AI-related stocks will continue to trend downwards today?

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