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Weekly Market Brief: September 11, 2023

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Week in Review

Crude oil was the week’s big winner, climbing more than 2% to reach its highest levels of the year. That happened even as stock prices erased some of the prior week’s gains, led by a 1.9% decline in the NASDAQ Composite. The US Dollar index finished higher for the eighth straight week – only the third time it’s accomplished that feat in the last 40 years. The Dollar’s strength hasn’t been great for alternatives: Bitcoin had its lowest weekly close since March, and gold prices fell 1%.

Last Tuesday, Saudi Arabia decided to extend its current voluntary oil production cuts of million barrels per day to the end of the year. Russia extended voluntary production cuts of their own. Together, Riyadh and Moscow lead OPEC+, a consortium of oil producing countries that together attempt to influence the global oil market and maximize profit. The impact of OPEC+ production cuts on oil prices has a mixed historical record. Supply cuts are usually in response to weakening economic conditions, where declines in supply are often more than offset by an overwhelming drop in demand. This time, though, the group’s efforts are getting results. WTI Crude has risen from below $70 in June to almost $90 per barrel today.

Market Internals

Breadth was a concern for most market watchers throughout March, April, and May, as the rally in growth stocks obscured lackluster performances from value-oriented names during the spring. In June and July, trends began to broaden – but the dog days of summer are taking their toll. Less than half of S&P 500 stocks are in uptrends, whether you look at 20, 50, 100, or 200-day average prices.

Trends are healthiest in the Energy sector, thanks to a resurgence in the price of crude oil. More than 80% of that sector’s members are above moving average prices – no matter the timeframe. Risk-off areas like Utilities, Consumer Staples, and Health Care are the most weakly positioned. According to intermediate and long-term averages, the overwhelming majority of stocks in each of those sectors are in technical downtrends.

What’s Ahead

Here’s what to watch in the week ahead: