The Weekly Average Momentum Index (AMI) rankings of HSA, SSPP, RSP, SELECT, ETF, iETF, and sETF have been posted on the "Rankings" and "Trading Logs" pages.
Trading signal occurs in FEMKX timing system: Sell FEMKX, Buy Cash
Technology stocks led a sharp pullback this week, as renewed doubts about the economics of artificial intelligence spending collided with hotter-than-expected inflation data, leaving the Nasdaq Composite with its worst week since June. The damage began early in the week, when cautious comments from Broadcom on AI infrastructure spending and a large memory-chip capacity expansion by Chinese chipmaker CXMT extended a semiconductor selloff into an eighth straight session — by Friday the Philadelphia Semiconductor Index was on track for its ninth consecutive down day. Software joined the slide later in the week as investors confronted the question of whether the tens of billions being poured into AI data centers can ever generate sufficient returns: the iShares software fund lost 7.4% for the week, with cybersecurity and cloud names such as CrowdStrike, Snowflake, Palo Alto Networks and Cloudflare each falling 17 to 18%, and Twilio plunging 10.6% Friday for the worst single-day drop in the S&P 500. The International Monetary Fund added to the anxiety, warning that hyperscalers' share of investment-grade bond issuance has ballooned from under 1% to 10% in two years and that leveraged and circular AI financing could transmit a single earnings disappointment across equity and credit markets. Wednesday's September CPI report — up 0.6% on the month and 3.7% from a year earlier, above the 3.6% consensus — and Thursday's 1.3% monthly jump in producer prices, the largest since March 2022, briefly revived expectations of a Fed rate hike, sending the 10-year Treasury yield as high as 5.33% before a flight to safety from the tech rout pulled it back to about 5.09% by Friday's close. Chair Kevin Warsh, speaking overnight at an IMF meeting in Bangkok, declined to signal either the October or December decisions, saying "It's a new chapter at the Fed, and we're not in that business anymore," after which traders cut October hike odds to 17% while holding December near 89%. Energy prices added to the inflation anxiety, with Brent crude settling near $110, up 3.7% Friday, on stalled Iran talks and reports of a possible strike near a key Saudi pipeline. The pain was concentrated in tech: money rotated into banks, energy and health care on generally strong bank earnings, cushioning the blue-chip averages. For the week, the S&P 500 fell 1.9% to close at 7,659, the Dow Jones Industrial Average gained 0.7% to finish at 52,002, while the tech-heavy Nasdaq Composite snapped its four-week winning streak, falling 4.5% to settle at 26,140.
From a technical perspective, last week's upside resolution of the weeks-long high-level digestion base failed to hold, as the S&P 500 rolled over from the 7,800 area and surrendered the record close, finishing Friday at 7,659 — back below its 20-day EMA and essentially resting on its rising 50-day EMA near 7,665, though still holding above the 7,600 support zone. The failed breakout turns the 7,800 to 7,817 zone — last week's 7,812 record close and the August 14 intraday record of 7,817 — into the immediate overhead supply the bulls must reclaim before our 7,850 target, and ultimately the 8,000 psychological level, come back into play. On the downside, the 7,600 zone is the immediate technical support now being tested, backed by our primary structural floor at 7,500, a break of which on a weekly closing basis would signal that something more serious is unfolding. With the S&P 500 settling at 7,659, our long-term structural trend-following indicators remain firmly in a "Hold" posture with no sell triggers fired.
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| The weekly chart of the S&P 500 index |
