The big things you need to know:
• First, our tiers of fear, sentiment, and valuation analysis suggest that the stock market could stabilize soon, even if Thursday’s close doesn’t turn out to be the low. But thinking about the next few months and into early next year, it’s important to remember that fundamentals still matter as our valuation and sentiment work are not “washed out.”
• Second, we likely need to see earnings sentiment stabilize to power P/Es higher.
• Third, other things that jump out in our indicators include the strong end to the week by Small Caps on the heels of Friday’s NFP print, the state of sector valuations after Thursday’s drop, and some new work we’ve done analyzing how S&P 500 sectors may respond to shifts in interest rates, gas prices, and consumer confidence/sentiment in the year ahead.
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