Bottom line: Have things Changed? Despite minor bounce this am.. Not really- Still right to favor Technology as the best sector and avoid a strong directional bet near-term on either Crude or Gold
Into mid-day, Equities have bounced to the tune of 1% as S&P futures have moved up to yesterday’s highs. While this is mildly encouraging, most momentum remains negatively sloped and we’ll need to see MORE progress before thinking the worst is over with regards to Market direction, particularly ahead of next week. Despite the weaker Economic data this am with Retail sales falling short, Treasury yields have spiked on the long end, as the yield curve continues to steepen- This can’t be attributed to much else outside of investors selling duration ahead of next week. The chance of a hike has now plummeted to 18% based on Fed fund futures, and if volatility continues into next week, which I feel is likely, Yields could give back most of these gains that they’ve experienced in the past few weeks. While much is being made of WTI Crude’s comeback, both Crude and Gold have been largely range-bound in recent weeks and nothing seems to have altered that today.
5s/30s Yield curve below, showing extreme steepening throughout September
S&P DID in fact breakout abovea minor downtrend this morning which has held over the last couple days as shown in the hourly chart below, but will still need to get back above 2163 to have confidence that the worst is over. The high TRIN reading the other day, in retrospect, was in fact important after all, with the near 3 reading showing a huge capitulatory reading of volume into Declining vs Advancing stocks. However, given that it’s still tough to make much of the trend over the last few days, which looks more like stabilization than a true market bottom, more proof is still needed that its right to be long ahead of next week. Most economists are still making the case for Rate hikes.. though the market seems to believe less and less.
Despite the choppiness in stocks, Tech continues to show very dominant performance and still has to be OVERWEIGHTED as the top sector to favor. Along with Energy, Tech is leading all other groups today with performance greater than 1%. Stocks like SWKS, AAPL, NVDA, and GPN are all higher by 3% or more, while FSLR, AKAM, RHT, and CSRA are all DOWN on the day. AAPL’s spike today is the most in 4 days’ time since 2009, as Tech has powered higher while both Financials and Utilities lag. The move in Utes can be understood, while Financials are lagging largely based on WFC performance (-1.4%)
CNBC Interview from yesterday at the NYSE, talking 10yr YIELDS
NN interview from Canada, live at the NASDAQ 9/14