“Never mistake motion for action.”
— Ernest Hemingway
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Agenda induced speedround …
Quiet session yesterday, which under the surface showed clear signs of exhaustion, which should surprise no one, given one of the fastet recovery rallies on record over the past few weeks.
Whilst the Nasdaq (+0.7) and the SOX - Semiconductor (+0.6%) eked out small gains, the Dow (-0.2%) fell for a second consecutive day and the Russell 2000 (-0.9%) as a representative of small cap stocks should a more substantial retreat.
The S&P 500 showed a tiny six points advance (+0.1%) on the day, which is pretty misleading, as loser outpaced winners by more than two-to-one.
Not getting a lot of focus (yet), but the real story seems to lay in rates once again, as duration was sold off yesterday, pushing the US 10-year Treasury yield as high as 4.55%, the highest seen since February and well above 4.50%, which was the strike level of the Bessent Put only a month ago:
No doubt, the ascent of yields has been more orderly this time around, hence no need for immediate panic by the treasury. Nevertheless, the “bond vigilantes” seem to be nervously moving around their feet under the table again. My intention is to write more about this in the weekend’s Quotedian.
And then, has the US Dollar rally already fizzled out again, despite a widening interest rate differential?
Perhaps. Here’s the standalone chart of the Dixy (US Dollar Index):
Another asset that is showing clear signs of exhaustion is Gold, where I would be tempted to add: Finally!
Asian (equity) markets are weaker nearly across the board this morning, with stocks retreating to the tune of one percent in major markets and now also joined by index futures of Western markets, albeit with lesser losses for now.
Time's up, more tomorrow - May the trend be with you!
In yesterday’s QuiCQ (click here) we highlighted the DeGraaf Breadth Thrust triggered earlier this week and its “beneficial effects” on stock markets. We also reminded our readers that we already had a Zweig Breadth Thrust buy signal two weeks ago, highlighted in a Quotedian (click here).
Two very bullish signals as standalone indicators, but what happens if we ‘combine’ the two via a rule, testing what the outcome is if both happened in the past within a month of each other?
Pretty darn’ bullish. Could it really be?
Stay tuned!
