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Equities Retreat After Remarkable Rally

Stock Market Update Thursday November 9, 2023 Equities Retreat After Remarkable Rally The Market’s Momentum Meets a Turning Point Following an impressive sequence of nine consecutive days of gains, the stock market opened to a change in sentiment. Sellers came to the forefront almost immediately as trading began. This initial softness in buying enthusiasm paved the way for a more pronounced sell-off post-1 PM ET. The catalyst for this shift was a disappointing $24 billion auction of new 30-year Treasury Bonds. The auction’s lackluster outcome necessitated that bond dealers absorb the significant remaining inventory, which precipitated a sharp decline in bond prices. Equity markets, sensitive to the fixed income ripples, declined in concert.

The S&P 500 manifested this sentiment shift through the formation of a key reversal bar, a technical chart pattern that often precedes a potential change in market direction. This reversal is characterized by three specific criteria:

  1. An extended price condition, suggesting the market may have reached an overextended state.

  2. An outside day price bar, indicating that the trading range for the day was wider than that of the previous day's.

  3. A closing price that reverses direction, signifying a possible shift in investor sentiment.

The confluence of these factors on Thursday indicates a market at a potential inflection point, meriting close observation by market participants.


Divergent Moves in Bonds and Commodities

The repercussions of the underwhelming Treasury auction were felt beyond equities. The 'long bond'—a reference to the 30-year Treasury—witnessed a yield spike of 13 basis points to settle at 4.77%. Moreover, the 2-year note yield breached the 5% mark for the first time in the month. This abrupt yield climb applied a hard stop to the recent bond rally, mirroring a broader risk-off mood.

The technology-heavy Nasdaq 100 index retreated by 0.75%, interrupting its advance and signaling a broader market reassessment. Meanwhile, crude oil prices exhibited relative stability, with WTI crude narrowly holding above the $75 mark. Gold’s slight price increase to $1,958 per ounce could be indicative of investors seeking traditional safe havens amidst heightened market volatility.

The VIX, the market’s barometer of volatility, closed above 15, a modest increase from the previous day, yet reflective of growing investor concern over future market fluctuations.


SPY ETF Filled the Gap Today

SPY ETF Stock Chart November 9, 2023
SPY ETF Stock Chart November 9, 2023

 

Premium Clients have been short Tesla since September 26, 2023

Tesla Daily Stock Chart November 9, 2023
Tesla Daily Stock Chart November 9, 2023

 

Premium Clients are long bitcoin

BTCUSD Bitcoin Daily Chart November 9, 2023
BTCUSD Bitcoin Daily Chart November 9, 2023

 

Watching the QQQ ETF for a bounce off this trend line, and we wait for bullish consolidation.

QQQ ETF Daily Stock Chart November 9, 2023
QQQ ETF Daily Stock Chart November 9, 2023

 

Premium members have maintained long positions for a while and have already realized profits. They are now waiting for an opportune moment to re-enter the market, contingent upon the continuation of the upward cycle.


SPY ETF Chart November 9, 2023
SPY ETF Chart November 9, 2023

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