Yesterday, stocks finished higher in a more balanced trading session compared to Monday. Interestingly, last Thursday appeared significant given the strong news from Nvidia (NASDAQ:NVDA) and the court ruling on tariffs. Despite that positive news, the market couldn’t hold its morning gains, and by day’s end, powerful reversal patterns emerged in the S&P 500.
Yesterday’s price action challenged those reversals, positioning us to retest the highs from the overnight session highs between last Wednesday and Thursday.
The CDX High Yield Index has improved since mid-April but has not strengthened nearly as much as the S&P 500.
The EUR/USD 5-year cross-currency basis swap spread hasn’t improved much either; in fact, it’s trending lower, suggesting tighter dollar funding conditions.
The MOVE Index has now risen for two consecutive days, returning to 100. More interestingly, when you invert the MOVE Index, it closely resembles the S&P 500.
Taiwan, the semiconductor capital of the world, has recently seen its stock market underperform.
Nor have the Nikkei 225 USD futures contracts.
The BTIC S&P 500 TR Futures certainly haven’t kept pace with the S&P 500 cash index.
The S&P 500 has even diverged from the DXY.
When you take seven different assets from various parts of the market, and six of them say one thing while one says something entirely different, you have to wonder what that one asset knows that the others don’t.
In a few weeks, we’ll either look back at yesterday and say, “Yes, all the warning signs were there—how did everyone miss them?” or we’ll say, “Wow, the S&P 500 knew something the rest of the investing world didn’t.”