MARKET CALL: From AI Zen To AI Jitters

The S&P 500 peaked at a record high of 6890.59 on October 28 (chart). It is down 2.4% since then. It retested its 50-day moving average on Friday, falling slightly below it around noon. It then closed higher on the day on hopes that a compromise proposal from the Democrats might end the government shutdown. Negotiations are reportedly happening, but they remain tense and far from resolution.

A week ago, we warned: "While earnings are bullish, sentiment is bearish in the very short term. There are too many bulls." A quick test of the 200-day moving average is possible and would amount to an 11% correction. That would be a buying opportunity. We are still aiming for the S&P 500 to end the year at or closer to a record high of 7000.