Thursday, May 15, 2014

ImageThe drop in the 10-year US Treasury yield is currently associated with the drop in equities. It is in an awkward situation that is better explained technically than fundamentally. The weekly chart of the CBOE 10-Year Treasury Index (TNX) broke under key support at 2.60%, which is essentially the same as the TDST Support at 2.59%. While this suggests yields have further to fall, this all may be part of a long term bottoming process, considering both the weekly and monthly timeframes hit major selling exhaustion points back in May of 2012. 

Bears have a slight edge now since the Russell 2000 (RUT) just barely closed underneath its TDST Support level. The most influential person to move markets today is David Tepper and he made a cautious call on equities this morning. 


S&P 500 (SPX) SHORT TERM OUTLOOK: BEARISH

Flip back to neutral if all of the following occurs: SPX closes above 1878.48, Nasdaq closes above 4057.12, and the Russell 2000 (RUT) closes above 1103.93.

ImageThe low intraday print for the SPX was 1885.77, which can be construed as a retracement to the recent breakout level. Another lower low will make a stronger bear case – especially if it can close below 1878.48. 


S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: BEARISH

Same as Short Term Outlook, flip back to neutral if all of the following occurs: SPX closes above 1878.48, Nasdaq closes above 4057.12, and the Russell 2000 (RUT) closes above 1103.93.

ImageImageImageThe RUT struck first and closed under its TDST Support at 1103.14 yesterday. Additional confidence will build for the bear case if the RUT can continue to lead the downside. 


 

S&P 500 (SPX) INTERMEDIATE/LONG TERM OUTLOOK: NEUTRAL

Switch to bearish if SPX closes below 1864.85 on May 16th (updated May 12th).


S&P 500 (SPX) LONG TERM OUTLOOK: BULLISH

Flip to neutral if the SPX does not trade above 1897.28 during the month of May and closes below 1836.27 on May 30th, the 8 month MA. Alternatively, flip to neutral if SPX closes below 1782.59 on May 30th (updated May 5th).


 

 

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