Markets Continue to Trade In Limbo - Time to Regroup

Time to regroup, after a 4 day break - felt more like 2 weeks:  

Treasuries remain stuck in the mud. I may pull the plug on that trade, and wait for a deeper correction, if we don't see short covering in the bond market - this week. I think we could see a deeper correction in equities markets as well - even in the big banks - when they report - next week.   

Small & midcaps rallied on Friday, but the machines are still selling the 20 day SMA. 

$VIX is higher this morning  - that's glaring - after headlines scream, "new intraday highs on the NASDAQ". Intraday highs on a Friday are not bullish. Feels like a repeat of  the week before - a Friday short covering rally. 

$COMPQ (60 min. chart view) Looks more like a retest of the same levels we've been watching for the past several weeks - not a clean breakout. 

This harkens back to my recent Sept. 21st  blog: 

...Buy Yom Kippur", is Still In Play - But The Wrong Sectors Are Leading 

Spoiler: The wrong sector that's leading is the same Mag7 + AI stocks that have been balancing the $SPX on the head of a pin, all year. Last weeks 20% short squeeze in Accenture $ACN doesn't change that.  

Possible catalyst for a much needed correction in the bloated AI sector:  

Today's AI hearing - scheduled for 11:00 AM EST NYC - to be streamed live:   

Former Anthropic researcher Coxon to testify at New York City AI hearing, Bloomberg News reports 

Oct 4 (Reuters) - Former Anthropic researcher Jacob Coxon will testify at a ​New York City hearing ‌on artificial intelligence, Bloomberg News reported on Sunday, citing people ​familiar with the ​matter.

Coxon will appear at the ⁠request of New York ​City Council Speaker Julie Menin, ​who has urged AI whistleblowers to testify as city lawmakers weigh ​a package of bills ​aimed at establishing safeguards around the ‌technology, ⁠the report said. (Reuters)

The rest of the market may continue to trade in limbo, until the next FOMC announcement (a pause already being telegraphed). 

In the meantime we could also see earnings spur a couple beaten up sectors e.g. financials, energy, even miners. 

I was bullish last week, and even added to our positions in treasuries, and midcaps, but unless we see a breakout in the next day or 2, I'm prepared to move to the sidelines - and sit on my hands, until I see a sustainable reversal - rather than the typical Friday short covering.  

Stay nimble