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Tough to get a move on

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Traders that may have been monitoring their Treasury YIELD in the 5-year ($FVX.X) 3.264%, 10-year ($TNX.X) 4.189% and 30-year ($TYX.X) 5.00% on their 60-minute charts as I tried to show in the market monitor at 11:49:00 get the feel that the equity markets were perhaps going nowhere fast today as these Treasury YIELDs hugged their 50-pd moving averages on this shorter-term 60-minute time frame for the bulk of the session.

It's been an interesting back of e-mail from both bullish and bearish traders as they note a stock fell precipitously near the open, only to rally back, while some bullish traders note that stocks that opened stronger, fell back and slowly edged higher. Some have even noted that while equities appeared to stage a late-morning comeback, the move didn't seem to be "confirmed" by any selling in Treasuries. Sure enough, 30-minutes or so passed by and the stock(s) they were monitoring just seemed to lose some bullish steam.

In all, these type of observations hint just how mixed things are right now and traders continue to look for a break.

Breadth is on the positive side at both the NYSE and NASDAQ. The big board has 2 stocks showing gains for every 1 stock declining, while breadth at the NASDAQ is showing a slightly narrower advance/decline at 20/13.

New highs versus new lows continues to show some day by day improvement at the NYSE. Currently, there are 42 stocks hitting new 52-week highs versus 24 stocks at new lows. NASDAQ continues to show some weakness in this category, but slowly narrowing the gap on a daily basis and currently has 43 stocks trading new highs versus 65 hitting new lows. Over a week ago, this new high versus new low was greatly skewed in favor of decliners.

As Treasury YIELDS hugged their 50-pd MA's for the better part of the session today, the major market averages continue to hold levels just above their 50-day MA's on the daily interval charts.

Key resistance technicals that seem to be forming in the S&P 500 (SPX.X) 941.24 +0.42 looks to be the three-session resistance at 950. True, the SPX has traded 951 today and Monday, but the 950 market is a nice round number that has had a tough time being broken.

Similar technical action may be building in the Dow Industrials (INDU) 8,870 -0.02% at the very round number of 9,000.

The NASDAQ Composite (COMPX) 1,393 +1.21% did break above the "round" number of 1,400 earlier today, but I get the sense that the market is running out of cash at current levels and it's "got to be" the Treasury bond market that holds the key to the cash register that may determine price direction.

Don't get me wrong though. Bears still appear eager to cover and quick to hit the "buy button" as some shorter-term 5-minute interval charts show some quick jumps higher in some technology stocks once some intra-day type of resistance is broken.

Unfortunately, I do think the Treasury markets are going to cast the "swing vote" for near-term (couple of days) equity price direction, and at 03:00 PM EST, the bond market is now closed and gives me little hint of how stocks finish out the session. Best "guess" here is more of the same with the broader market averages finishing near current levels.

Jeff Bailey
Senior Market Technician
Option Investor

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