No Fear of the Fed or Just "Hope?"

Markets are under pressure as bonds fall and the US dollar rises.

Technical Edge — 

• NYSE Breadth: 75% Upside Volume

• NASDAQ Breadth: 57% Upside Volume 

• VIX: ~$26.50

Game Plan: S&P, Nasdaq

Yesterday’s rally is getting some cold water thrown on it today. 

The dollar is rallying and bonds are getting smoked as the TLT is trading new 2022 lows in the pre-market.

The 2/10-year spread (a key recession indicator) has been negative for 10 weeks and is at its lowest level since August 9. At -0.46%, it’s just 2 basis points above the low. 

For those that watch the 3-month/10-year spread instead, it’s at its lowest level in a month and 12 basis points above 0. 

Those aren’t observations to be scary, just the reality of “the bigger picture.” if they can undo some of these moves, maybe that gives equities a little relief. Otherwise, keep these in the back of your mind. 

At this moment, I’m going day by day with the indices. Many individual stocks are not jumping out to me, aside from little cash-flow trades off the relative strength list below. I’ll pass along some longer-term areas of interest at some point this week.

SPY

H4 chart above as SPY is retracing about half of Monday’s move in the pre-market. If we run higher off the lower open, I’m watching that 388.50 to 390/391 zone. 

That’s yesterday’s high for a potential look-above-and-fail as well as key pivot zone. If the SPY can clear this area, $400 is not an impossibility ahead of the Fed. 

On the downside, $382 is vital. 

S&P 500 — ES