US Equity futures fractionally lower this morning ahead of Yellen's speech and increasing signs of weakness in SPX, which has broken trends from mid-February as momentum and breadth have pulled back a bit in the last week. WTI CRUDE along with TY YIELDS starting to take the lead in turning down, which is important to watch given the recent positive correlation to stocks. GE's move to new multi-year highs failed to help Industrials make much headway, as Transports were weak again, now falling for five straight days, while Small-caps have also lagged in the last week after a strong February. Seasonal bias for late March is for weaker prices given portfolio changes into end of Quarter, and we've seen some evidence of that with weaker Materials and Energy which had been strong over the last month but weakening near-term.. Utilities and Healthcare, meanwhile have strengthened and gone higher as the weaker sectors in the last month have shown some signs of relative strength.
S&P has given back all of overnight gains up to 2033 which will continue to be important, while testing yesterday's lows near 2022, shown by support line. UNDER 2022 following Yellen would allow for a quick test of 2012 and likely under in the days ahead, as the market begins to follow suit with what WTI and TNX have done in recent days. For now, trend bearish in the near-term, and one should look to press shorts and/or hedge under 2022 for a move lower over the next 3-5 trading days.
Additional markets to watch- Bund yields have nearly completely retraced move from early March, down to .15bps from the mid-30s two weeks ago. Given that nearly all of the months gains have been retraced, a move down to near 10bps or lower could happen in the near-term before stabilizing. Important given that TNX has traded in lockstep with bund yields which in turn has some impact on US Stocks
All eyes on the Brazilian Bovespa, with the PMDB, the main ruling party in Brazil, voting to potentially abandon Rouseff which would tilt the odds towards her impeachment amidst a corruption scandal- Bovespa above, has rallied on the prospects of this along with emerging mkt strength overall in recent weeks