Good Morning. Apparently bad is good and really bad is really good, still. That never gets old. So “really bad being really good (or is it rally good)” means when ISM manufacturing contracts three consecutive months, which has not happened since the 2008 recession, the markets rally. At least the Russell can rally 1.25%. Absolutely astonishing to type those words. Even more astonishing for it not to be a joke.
So we have an interesting development. The Dow is actually trying to show downside leadership. As discussed in the Tuesday Market Recap, the Dow Industrials had been diverging from the Composite, Utilities and Transports all of which had triggered short per the model. Well, that all changed as the Dow Industrials in fact triggered short on Tuesday. The price component was met last Thursday but momentum was lacking. Then on Friday the price component was lost. But today, the moons aligned and the Dow Industrials triggered short.