Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious OutperformanceFind Stocks Now

S&P 500 Uptrend Under Threat Ahead of Key Data, Powell Speech

Published 28/11/2023, 08:33
Updated 20/09/2023, 11:34

Yesterday was a fairly uneventful day, with the S&P 500 falling roughly 20 bps. Meanwhile, the 2-year auction at 11:30 AM was fairly ugly, with the new issue tailing one bps, while indirect acceptance fell to 57.4% from 62% last month.

The 5-year auction saved the day, coming in line with the when-issued trading rate and an indirect acceptance rate of 65.5%, which was better than last month’s 61.5%. Today, the 7-year auction will come at 1 PM.

It isn’t entirely unclear at this point, but it appears we are consolidating and pretty much topping out at these levels based on the Nasdaq futures. The future contracts have traded sideways since November 15, and that isn’t saying much for a market that is supposed to be going higher.

Nasdaq 100 Futures-30-Min Chart

S&P 500 Remains Below July High

Meanwhile, for the S&P 500, as I have noted a few times now, I think the rally off the October low is a 3-wave structure and is a retracement of the declines from the July peak. At this point, this still seems valid, as the index remains below the July highs and, like the Nasdaq, appears to be churning.

If that is the case, I have no evidence to change my opinion, the lows of October, around 4,100, should be undercut. That may be a hard thought process for many to swallow, given what we have witnessed and all the other chatter from many other sources.

However, given my data and my understanding of market mechanics, fundamentals, and technicals, this is my belief. Additionally, I work in isolation and do not rely on what others think, and I like to form my own opinions.S&P 500 Index-45-Min Chart

3rd party Ad. Not an offer or recommendation by See disclosure here or remove ads .

At least for today, the CDX High Yield Index increased, and it will need to continue to rise for my opinions on the S&P 500 to prove correct. Stocks, after all, are merely a derivative of the credit market, and where credit conditions go, stocks are likely to follow, especially when considering the earnings yield of the S&P 500.

CDX High Yield Index

This week could see things pick up, especially with more economic data, a PCE report, and Jay Powell. Depending on how all of this goes, we could see these spreads widen further, and if that happens, stocks will reverse lower as spreads widen, pushing implied volatility higher.

Shopify Reports Strong Black Friday Sales

Meanwhile, Shopify (NYSE:SHOP) had a good showing today after reporting strong black Friday sales metrics for its merchants. The stock has performed very well, and while its RSI is over 70, the Bollinger Band shows it could still rise some more, as it doesn’t appear to be overbought yet.

If it can clear $75, it has a chance to fill the technical gap at $89 from February 2022. Members of my services know I have owned this stock since June 2022, when it was trading around 5x sales.Shopify Inc-Daily Chart

Original Post

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.