Morning Comment:

Tomorrow night, the Boston Red Sox and the NY Yankees will play in the wild card playoff game at Fenway Park in Boston. This is essentially a “play-in” game for the American League playoffs. Just over 40 years ago, we had a very similar situation. Like this year, both teams finished the year with the exact same record, and they had to play a special playoff game to see who would make the American League playoffs that year.

Like this year, the game was played at Fenway Park…and it was a very close/exciting game. The game was ultimately decided by a homerun (late in the game) by a weak-hitting shortstop named Bucky Dent. His high-fly ball to left field would have been a routine out in any other ballpark in America. However, with Fenway’s short left field fence, it was able to carry over that fence…and help them win the game………..Tomorrow night’s game should be as exciting as that one from almost 40 years ago.

Anyway, the stock market saw a very nice bounce on Friday…as the S&P 500 index was able to rally more than 1%...and it helped the stock market regain some of the losses from earlier in the week. However, they did not recover as much of the losses as it did during the previous week’s bounce. Also, the breadth was not particularly compelling. Yes, it was almost 4 to 1 positive for the S&P 500, but that was nowhere near as good…as it was bad…on the big down-days from last week. Also, the breadth on the Nasdaq was just 1.6 to positive…and less than 2 to 1 positive on the NDX Nasdaq 100 Index as well.

We’d also note that the volume was 10% lower than it was during the previous day’s sharp decline. In fact, we’d note that the volume was much lower on Wednesday and Friday than it was on Monday, Tuesday and Thursday. In other words, the volume was much higher on the days when the market declined in a material way…than the days it rallied last week. In other words, the “internals” of the market continue to be weak, so that does not bode for the thought that the pullback in the stock market that began in early September has run its course.

The futures are trading lower this morning…as concerns about inflation continue to worry investors. Of course, continued concerns over supply chain issues is the number one reason why inflation fears elevated. Those fears are also being fueled by the continued rise in commodity prices (which has been affected by those supply chain issues). The CRB Commodity Index is rising again this morning…and now stands at its highest level since 2015. It has rallied almost 60% in the last 12 months…and stands more than 20% higher than where it stood in very early 2020 (before the pandemic).

We have talked a lot about the 100-DMA on the S&P 500 Index…as well as the lows from each of the last two weeks. We’ve said that a break below that level would be quite bearish…because the 100-DMA has provided excellent support for the market over the past 12-13 months…and it would give the index a key “lower-low.” However, we’d also note that the lows from the past two weeks is where the “neck-line” of a “head & shoulders” pattern comes-in. Therefore, this gives us another reason to worry about last week’s lows if the stock market rolls-back over from Friday’s bounce.

Maybe the scariest thing to contemplate, however, is that is has become obvious that the fate of the stock market over the rest of this year will be determined by the Red Sox/Yankees game on Tuesday night!!!!!! There is little question that if the Yankees win, it will be VERY bearish. Just look at what happened in 1978!!! Back then, the stock market had seen a 5% decline in September, but it was able to bounce a little bit off that low. HOWEVER, after the Sox/Yankees playoff game (and the Yankees’ victory), the stock market rolled-back over and decline ANOTHER 12%!!! Therefore, there is no question that if the Yankees win on Tuesday, the stock market will fall out of bed almost immediately!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Of course, investors CAN take solace in the fact that the Red Sox have “reversed the curse” since 2004. The Sox gave us the greatest comeback in the history of baseball that year…and they have won four World Series (to the Yankees one) since then. HOWEVER, younger people do not realize how bad things were for Red Sox fans in the 25 years before 2004. In fact, if you went into any sports bar in New England between 1978 and 2004, there was always one guy sitting in the corner all by himself. That guy had always had a few too many drinks…and he was always staring off into space…mumbling to himself, “Fuc&ing Bucky Dent.”

Matthew J. Maley

Chief Market Strategist

Miller Tabak + Co., LLC

Founder, The Maley Report

275 Grove St. Suite 2-400

Newton, MA 02466


Although the information contained in this report (not including disclosures contained herein) has been obtained from sources we believe to be reliable, the accuracy and completeness of such information and the opinions expressed herein cannot be guaranteed. This report is for informational purposes only and under no circumstances is it to be construed as an offer to sell, or a solicitation to buy, any security. Any recommendation contained in this report may not be appropriate for all investors. Trading options is not suitable for all investors and may involve risk of loss. Additional information is available upon request or by contacting us at Miller Tabak + Co., LLC, 200 Park Ave. Suite 1700, New York, NY 10166.

Posted to The Maley Report on Oct 04, 2021 — 8:10 AM
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