Powell to the Rescue

S&P 500 coudln‘t defend 4,392, and 4,365 only temporarily provided support. On bond market fears, 4,354 gave way – but jubilation over a good auction, didn‘t last. Tech stocks barely provided a refuge, and semiconductors didn‘t catch breath yesterday.

Yet I wonder whether these bearish signs would hold for long, as EURUSD is cushioning any yields triggered downswing attempt. Q3 earnings aren‘t proving that bad, retail sales came strong while housing was mixed – too many cyclicals with Russell 2000 were beaten yesterday, so we can look for a rebound attempt. The tentative longs in the intraday channel are looking good.

Too early yet to say whether in the very short term it would be one of a dead cat bounce variety, but I think this has lower probability than a local bottom being put in – why and what to watch, I‘m explaining in the premium chart section. I‘m still of the opinion that Q4 is to bring seriously higher stock prices, and that S&P 500 is holding up well in the Mideast turmoil.

The weak spot is the Treasuries market, where no retreat from yesterday‘s 4.90% brings my 5.10% - 5.20% technically doable 10y yield call, ever closer over the coming weeks.

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Let‘s move right into the charts (all courtesy of www.stockcharts.com) – today‘s full scale article contains 5 of them.

Stocks and Sectors

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  2. NFLX and XLC would reverse latest weakness, and take on $390 shortly.

Credit Markets

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Bond market is indeed intent on doing more tightening for the Fed, and shows risks of going a little parabolic in the days ahead. On some days, that would hurt stocks more than on others – today, it‘ll be one of lesser impact days – the best ones for stocks though are to be those of noticeably retreating yields (4.40% would be a technical target for the months ahead).

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