Can Bonds Put in a Low?

If bonds can bottom, stocks can rally.

Technical Edge — 

• NYSE Breadth: 79% Upside Volume

• Advance/Decline: 71% Advance 

• VIX: ~$30

Bonds might have given us a low on Friday, especially if they can rotate higher today. If we can pair that with weakness in the dollar, we have a recipe for a potentially sustained rally in stocks. 

The ES tagged a very key area overnight, faded and regained some bullish momentum in Globex. Let’s see if that plays out again in the regular session or if the bulls can hold more of those gains. 

Again (and like a broken record) it will likely depend on how bonds and the dollar trade. 

S&P 500 — ES 

On Friday, the ES rocketed off 3640 (the June low, as well as the 50% retrace of the recent rally) and climbed into the week’s high. 

This morning, the ES is struggling with 3800, the highs from early this month. If we can clear this zone, not only will the ES go weekly-up but it will clear notable short-term resistance. That opens the door to the 50-day moving average and the 3900 area (call it 3385 to 3915). 

On the downside, keep an eye on 3964. Below that level could put the Globex low in play at ~3736. Bulls need to see the ES hold the 10-day and 21-day moving averages. 

S&P 500 — SPY