Goldilocks is the term for a not too hot (inflationary) and not too cold (deflationary) economic backdrop. Within this we’d favor Tech and possibly Semiconductors * for their leadership over cyclicals, industrials, etc.
Here in the Q4-Q1 rally (such as it is) the markets are laboring on, grinding and fretting about the hawking Fed. As noted to date, the technical parameters of the S&P 500 (itself a relatively weak laggard to many individual sectors) are still intact. Also intact is Semiconductor leadership over both Tech (NQ/NDX) and Broad (ES/SPX).
So I find it interesting that this morning, pre-payrolls report, NQ/ES is well in leadership mode. What I’ll find even more interesting will be its state after payrolls. If the number is another upside surprise we might see NQ/ES get whacked. But if payrolls are weak, I’d expect Goldilocks to reassert relative strength. Hey, maybe January hogged up all of February’s openings. I am joking, but not really.
I will actually be out when the payrolls data is released. But keep an eye on the NDX/SPX (QQQ/SPY) because I think it is going to do something today, one way or the other. If that way is up then the rally likely lives on. If not well, it’s a bear market rally after all.

* Semiconductor was the ultimate cyclical industry, but it is less so now due to more pervasive use within many industries, and for our purposes above we’re talking ‘down ‘n dirty’ older-fashioned cyclicals.
What, please, does that chart depict? What do all the numbers and letters in the top line starting off with NQ1! /ES1!….. actually mean? A ratio of some sort? Of which it is hoped that it is calculated correctly by the software? What meaning does a candle (open-close-high-low), of a fictitious entity like a ratio have especially if the numerator and denominator move in different directions during the day?
A ratio not of sorts, but in reality. It is calculated correctly. I don’t care about a daily candle. I care about the trends.