S & P 500, Nasdaq Issues:
- Both were days of recovery of U.S. stocks Nasdaq 100 and S & P 500 It jumped to a fresh October high.
- The US Treasury yield, which hit a six-month high last week, continued to soften. Tomorrow will bring retail sales from the United States, which could boost yields and thus stock prices.
- The analysis contained in the article depends on Price action When Chart formation.. For more information on price actions or chart patterns Daily FX Education section.
Yields continued to fall after last week’s 10-year Treasury yield hit a six-month high. A series of sales were shown in September and held until the opening in October, which could further deepen the sales...
Currently, the focus has shifted to a batch of US data on tomorrow’s economic calendar, retail sales are scheduled after 8:30 am, and there is a preliminary reading of consumer sentiment at the University of Michigan.
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At the S & P 500, the index outperformed the wedge resistance built through trading in early October. Prices were pushed up by resistance with the 23.6% Fibonacci retracement of the major move from May to September, and this is from the same retracement that helped set the lowest at the 50% marker last week.
This keeps the door open, increasing the resistance above the index, with a possible forward resistance of 4473 and then 4500.
S & P500 Daily Price Chart
The technology-heavy, rate-sensitive Nasdaq 100 continues to do the same today. However, there is a slightly bearish situation here. If the rate keeps rising, this can lead to an interesting reversal setting for the index. The NQ has remained below the bearish trendline, which has hit a high since September, while falling below the 23.6% retracement of the major move from May to September. For comparison, this is the same measured move we saw above on the S & P 500, where the Best Equity Index rose much today beyond its 23.6% retracement, while the Nasdaq 100 Potentially staying inside so far, thereby emphasizing the reversal.
For the bearish trendline, there is a symmetry that can create a channel, and if there is a bearish channel after a long bullish run, it is the formation of a bullish flag.
Therefore, this is an important area of resistance for the Nasdaq-100. If the index could break, it looks like the door to a bullish strategy has been reopened based on the bullish flag breaking. If that is the case, then the possibility of a bearish swing remains, which can lead to the basic theme of higher yields.
It’s important to note that this strength is manifested in Nasdaq as yields are softening this week. This shows the potential for drivers whose interest rates may continue to be maintained here.
Nasdaq 100 Daily Price Chart
We’ve talked about rates a few times here, but it’s also worth sharing the charts, as it also emphasizes that some of these short-term dynamics appear to be rate-driven. The following 10-year Treasury yield daily chart dates back to August when interest rates bottomed out. But note that last week we had a 1.614% read, the highest since June.
And since the Fed’s rate hike was decided in late September, this has been a very bullish theme, and this week’s softening looks more like a pullback rather than a reversal.
Tomorrow’s retail sales data could have some impact here. If the numbers soar, yields can soar again and stock sales can occur. Even if the numbers are in-line or lower than expected, yields can continue to decline, further pushing up stock prices.
10-year government bond yield
Written by —- James Stanley, Senior strategist For DailyFX.com
Contact and follow James On Twitter: @JStanleyFX
S & P 500, Nasdaq Rip as Yields Dip, Focus Shifts to Retail Sales
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