The indices have some minor gains with breadth running about 4,550 gainers to 2,500 decliners. There are more than 230 stocks hitting new 12-month highs, which is mainly due to continued strength in select small-caps.
What is most notable about the action Friday is the continued weakness in bonds. The iShares Barclays 20+ Bond Fund (TLT) broke below its 50-day simple moving average after a parabolic run in August. A number of traders characterize the action as "the bond bubble has popped."
There doesn't seem to be any particularly fundamental reason for bonds to weaken to such a degree. There haven't been any major changes in the economic outlook and there are no indications of a major rotation out of bonds and into equities.
Expectations for the Fed have shifted slightly with a slight decline in expectations for a quarter-point cut, but it is still a near certainty. Like the sector rotation that took place in equities earlier this week the move in bonds looks technically driven by big funds and isn't a function of a major shift in the economic outlook.
I am finding it extremely difficult to do much trading. I'm concerned I'm trying too hard to force things in a think and choppy environment and it is probably better if I just relax and wait for something to develop. It is very likely we should see some increased movement into the Fed decision next week.
SmileDirectClub (SDC) disappointed Thursday when it failed to hold its IPO pricing but bored traders are having a good time playing a bounce in the name Friday. Nothing changed overnight but in the current environment it is a readily apparent trade and once it started to work others jump in as well.
I'll continue to look for some setups, however, it is probably better just to relax and wait until next week before making new moves.