Santoli's Tuesday market notes: Quietly hot market waits for vital jobs report

Published Tue, Aug 31 20211:58 PM EDTUpdated Tue, Aug 31 20212:18 PM EDT

This is the daily notebook of Mike Santoli, CNBC's senior markets commentator, with ideas about trends, stocks and market statistics. Profoundly quiet tape as the Street waits for Fridays jobs number and idles at the highs to finish the month. Monday's grab for the mega-tech leaders in the absence of news has no follow-through, perhaps reflecting the group looking stretched to the upside in the short term in a way the broader indexes don't, not quite yet anyway. Assessing the scene two-thirds of the way through the year: S & P 500 +20% without a 5% drop, most closely resembling the steady rotating uptrends of 2017, 2013 and 1995 – the later matching the 2021 pattern quite closely (this was a post-shock year in a more modest way, the Fed having crashed the bond market in '94 and then easing in '95 as the tech-stock enthusiasm was just getting rolling). Prior years when the S & P was up at least 15% YTD through August tended to add to gains the rest of the way (up 12/14 times), to the tune of 4% on average with wide variation (+21% Sep-Dec in 1954, -25% in the '87 crash year). Similar story with a couple other streaks now active: three straight 2%+ monthly gains and seven straight positive months for the index. Most historical studies come down on the side of "strong markets beget more strength for a while longer" even if there are loud exceptions and at some point payback usually awaits. Yes, September has a rough history for stocks, but again has been a bit less treacherous in an already-strong market. Growth/value have diverged and re-converged, responding to macro data flow, bond yields and technical cadences. Now near parity YTD for the big caps. Robinhood bouncing modestly as the consensus coalesces around the idea payment for order flow won't likely be outright banned and PYPL will be a threat but there's room in the market for all to grow or a while. But the healdines and HOOD stock weakness do underscore that it offers nothing proprietary. It's a low-barrier-to-entry service wrapped in a cool app and resonant brand. Also Fidelity's brokerage (third largest in the US) doesn't accept PFOF and makes it up elsewhere (advisory fees, market-making, net interest, etc). Market breadth firmer today 60/40 up/down split. Credit markets are quiet, steady. VIX bumping around in the 16s, might edge higher despite quiet tape as jobs day ears.

Traders work on the floor of the New York Stock Exchange, July 15, 2021.

Brendan McDermid | Reuters

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