Weakness getting closer to support for equities, but not quite there-after giving back 50% of the rally from 5/19 but should be good to buy into FOMC Non-Action. The bond surge that led to stocks pulling back is continuing today, with 10-year German Bund yields now dipping below 0 while US 10yr yields have fallen to the lowest closing levels since 2013- US Dollar turning back up with a vengeance, and some signs of both Grains and Energy turning down further. Utilities should be favored in this environment in the short run, with DTE, ED, PCG, WEC, CMS all attractive, while the Staples also remain in very good shape, as K, PM, RAI, SJM, CLX, MO are trading very well- Meanwhile, Financials look to have a bit more to go on the downside, and GS, BAC, C, SCHW, KEY, BEN still can face a bit more decline as yields push lower- S&P has support near 2061-2 for Sept futures, then 2054, while SPX cash should reach its own 50% level at 2072 with 2062 also important here- Overall, will be difficult to call any sort of low for stocks until we see yields stabilize, as the bond move resulted in stocks following suit to mirror the breakdown in yield- Yields at this point are stretched, with oversold conditions and Demark buys on Yield charts showing up by Thursday just post FED, so things look to be getting closer- For today.. Look to cover shorts on any move down to 2050-4 in S&P cash or futures into tomorrow-Early movers in VG, AKAO, on the upside, while INFI, RVNC, WGP, BIDU, NERV, ZBH, CGNX, IMGN, LQ, NAV, WNC all lower- Let me know if you have questions
S&P trend stretched here, but bonds likely should lead the way- Area below 2062 lies near 2050-4 to buy dips into FOMC, as trend likely does not undercut May lows this go-around
German Bund yields have accelerated down under 0 after cracking .07 last week- Yields are stretched here, outside Bollingers on Daily charts, while Demark indicators highlight another 2-3 days as being important for likely stabilization- For now, getting close, and Bunds should be watched carefully as they led the move down in US TY yields
The US Dollar index should be watched carefully in the days ahead, as if May highs are exceeded, which coincides with EURUSD getting down to 1.11 or lower, this would likely trigger a big selloff in the Metals and Energy- Grains have gotten a jumpstart on this move today with Soybeans reversing lower- But on a BREXIT Yes vote which causes uncertainty, a plunge in the Euro would result in commodities likely giving back much of their rally in the last few months and would be a likely negative for Materials, Energy, Industrials- Stay tuned.