Interest Rates Rip

Dow: +54.45…
Nasdaq: +25.54… S&P: +2.08…

The S&P flirted with record territory on Wednesday morning but pulled back in the afternoon as investors expressed concern over a surge in bond yields. The S&P  finished the session with a slim gain of 0.1% after trading as high as +0.6% intraday.

As for the other major indices, the Dow managed to keep 0.2% of its 0.7% intraday gain, closing at a new record high for the second day in a row. The tech-heavy Nasdaq finished +0.3%, and the small-cap Russell 2000 finished +0.9%, undoing some of the damage done on Monday and Tuesday.

The financials (XLF) moved higher by just under 1%.  The banks still look heavy to me and have their work cut out for them.

The builders (XHB) hate higher rates and as you can see below, they are paying the price.  Down 11 days in a row.

Biotech (XBI) had a solid bounce off lateral support and its 200-day moving average.  It was exactly where it should have bounced, the key now is to get a follow-through day or two to validate today’s move.  One day doesn’t change a trend…….which has been down.

Today’s bounce in XBI was great, but here’s why it’s very important.  As you can see in the chart below, it did bounce today BUT as you can see its right on the neckline of a bearish head and shoulder pattern. If the neckline breaks (red line) then we could have some problems.  This is a bearish pattern, HOWEVER in this secular bull market that we found ourselves in, many of these patterns never validate lower. In a sloppy bear market, they usually validate lower all the time.  We’ll just have to see.

As I said it was nice to see the Russell 2000 (IWM) bounce today after acting like crap over the last month, but I don’t put any faith in one-day bounces.


Previous Post
Tech Still Puking
Next Post
Rates Becoming An Issue and Crashes That Always Come

Recent Articles