Risk assets should consolidate as Bond yields/USD Spike Array ( [cookie] => 173aaf-da1bbc-1f54b9-040222-4df555 [current_usage] => 2 [max_usage] => 2 [current_usage_crypto] => 2 [max_usage_crypto] => 2 [lock] => 1 [message] => [error] => [active_member] => 1 [subscriber] => 0 [role] => fsi_macro [visitor_id] => 568007 [reason] => [method] => ) 1
The huge NFP (Jobs) print on Friday could very well be the catalyst for a short-term pullback in Stocks. This led to a rapid backing up in rates and also a ratcheting up in the US Dollar. Over the next two weeks, I anticipate a backing up in Yields and US Dollar back to monthly highs, and this likely coincides with $SPX selling off to down near 3900 or even 3850. Reasons for a decline have to do with meaningful resistance given trends in $SPX and $QQQ along with counter-trend exhaustion per DeMark indicators. Additionally, cycles based on my Mass Pressure index point down into 8/15, which I feel coincides with a consolidation in stock indices after a stellar 14% lift in seven weeks. For those that utilize Fibonacci tools, it’s noteworthy that the $SPX rally from 6/16 was 49 calendar days, representing a perfect Fibonacci 61.8% in TIME of our 3/29-6/16 decline of 79 days. Overall, a pullback looks to be upon us, but I do not suspect it should prove damaging enough to retest lows, a theme that increasingly seems to be consensus.
Technical Reasons for near-term Concern
- $AAPL, $MSFT, $AMZN, $GOOGL along with $QQQ, $SPX all up near trendline resistance.
- Short-term momentum nearing overbought levels after a 14% $SPX gain in seven weeks’ time, nearly 2% gains on average a week.
- US 10-yr Treasury yields look to be turning back higher and have recouped the prior Head and Shoulders pattern that had been broken. Yields and stocks have shown consistent negative correlation, so I think this jump in yields could prove negative for Stocks.
- Counter-trend exhaustion via DeMark TD Sequential and TD Combo indicators.
- Cycle composites point lower starting 8/5 into 8/15 before turning back up.
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