With the Dow divergence (the only major index to manage a new high) in full ''flight to safety'' mode there is not much space left for the bulls... Unless you are day trader, one should avoid long position at this point : the risk reward ratio is, well, not good ! As in 40 or less on the upside vs a downside of 200+. A lot of churning is going on and the bond market is literally awful. A pause in the interest spike could provide the excuse needed for the final leg up. When the bonds resume falling, the stock market will have no choice but to follow. Happy trading
Komen
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Komen
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Komen
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Good start, we've broken the yellow line (up trend) with what could possibly be a leading diagonal. We will know soon. If the SPX can't manage a new high tomorrow, I shall provide some downside targets.
Is this a failed breakout? Doesn't seem like there was much conviction to go higher!
Schnauzel
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@stantrader, we'll know after the CPI number due tomorrow morning. If higher than expected, the stocks (and bonds) will tank.
stantrader
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@Schnauzel, why tank if higher than expected? Because it confirms a rate increase?
Schnauzel
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@stantrader, Yes, well sort of. A higher CPI means higher expected inflation and a lower bond price. Which means higher interest rates for the bonds. Personally, I follow TNX. (the ten yr treasury note). As or the FEDs, they can hike or stay put; it won't really matter at this juncture : the real rates (bonds and notes) is what matters.
Schnauzel
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@stantrader, for more on the TNX please read my other post (idea)