Mike Santoli's market notes: New low for week, untrustworthy bounces, stay-at-home stocks fall

Published Fri, Sep 11 20201:35 PM EDT

This is the daily notebook of Mike Santoli, CNBC's senior markets commentator, with ideas about trends, stocks and market statistics. The indexes drifting entirely within the week's range, until just now when the S & P 500 fell to a new low for the week. Overnight bounce attempts have been untrustworthy this month and late-day selling has been a feature — a switch that implies investors found themselves in September a bit too exposed to the popular big index stocks. The daily low in the S & P 500 three of four days this week was within a few points of 3330. That's where the index close Aug. 11 – a handy date from which to mark the start of the acceleration into an upside overshoot, as TSLA announced a split and the call-options chase really got going. It's also less than half a percent above the 50-day average – something often hit/breached in a correction but also an area that in bull markets typically attracts and rewards dip-buyers. Still looks mostly like bleeding away the crazy overinflated stuff rather than a rethink of the macro environment. The four biggest drags on the Nasdaq-100 this month - Apple, Microsoft, Amazon and Tesla – account for more than half that index's ~9th drop this month. The same four are still responsible for more than 100% of the Nasdaq 100's current 26.7% year-to-date gain. The unknowable factor is how far this skimming of the froth needs to go to put the tape (or at least the Nasdaq) on a firmer plane. The NDX peaked at more than 30% above its 200-day average, a monstrously overbought condition, and is now about 17% above – better, but hardly a tame reading. The massive stampede in small call-option orders by retail speculators has slowed only a bit, not really going away. And do professionals who've been complaining about the narrowness of the market and the need for a pullback seem a bit to satisfied and comfortable with the way this market break has played out? Do folks need to be more scared before a reliable low takes hold? Just asking… Equal-weighted versions of the S & P 500, consumer discretionary and industrials are all up today. The average stock has well outperformed the big-cap indexes this month. Folks have been predicting and wishing for a rotation into something other than huge-cap growth, this is kind of how it looks. PTON and CHWY (and to a lesser degree LULU ), exemplars of stay-at-home beneficiaries and exploiters, both seeing their shares down on great results. Maybe a clue that the market is looking past this phase? Credit markets still quiet, registering no stress or alarm. CPI was modestly above forecasts but far from any worrisome levels. The Fed is all-in, housing is riding high, nothing is yet slowing the reopening progress, Wall Street strategists never bought into this rally fully and earnings forecasts are moving higher – even for the current quarter, which is rare. These are net positives that should buffer against severe, lasting downside even if this correction chops deeper into the summertime gains. Market breadth is decent, 50-50 on NYSE and modestly negative on Nasdaq. VIX is whooshing lower, both pricing in a weekend lull and calmer tape today. It remains pretty juiced, tons of hedging in the books the past few months. Tough seasonal backdrop, coming election and the twitchy action in the index leaders keeping VIX aloft, though still looking at a decent decline for the week at this point.

A stock trader wearing a mask walks near social distancing signs the day a new IPO is launched at the New York Stock Exchange as the city continues Phase 4 of re-opening following restrictions imposed to slow the spread of coronavirus on August 27, 2020 in New York City. The fourth phase allows outdoor arts and entertainment, sporting events without fans and media production.

Alexi Rosenfeld | Getty Images

This is the daily notebook of Mike Santoli, CNBC's senior markets commentator, with ideas about trends, stocks and market statistics.

The indexes drifting entirely within the week's range, until just now when the S&P 500 fell to a new low for the week. Overnight bounce attempts have been untrustworthy this month and late-day selling has been a feature — a switch that implies investors found themselves in September a bit too exposed to the popular big index stocks.
The daily low in the S&P 500 three of four days this week was within a few points of 3330. That's where the index close Aug. 11 – a handy date from which to mark the start of the acceleration into an upside overshoot, as TSLA announced a split and the call-options chase really got going. It's also less than half a percent above the 50-day average – something often hit/breached in a correction but also an area that in bull markets typically attracts and rewards dip-buyers.