by Don Vialoux, TechTalk
Upcoming US Events for Today:
- Chicago Fed National Activity Index for July will be released at 8:30am. The market expects -0.10 versus -0.13 previous.
Upcoming International Events for Today:
- Japan All-Industry Activity Index for June will be released at 12:30am EST. The market expects a month-over-month decline of 0.7% versus an increase of 1.1% previous.
- German Producer Price Index for July will be released at 2:00am EST. The market expects a year-over-year increase of 0.7% versus an increase of 0.6% previous.
- Canadian Wholesale Sales for June will be released at 8:30am EST. The market expects a month-over-month decline of 0.5% versus an increase of 2.3% previous.
Stocks ended lower on Monday, extending the present losing streak for the S&P 500 Index to four days. Losses in stocks were accompanied by continued losses in bonds as the yield on the 10-year note pushed closer to the 3.00% level. A long-term chart of the 10-year yield shows that a significant declining trendline is being tested at present levels; should yields break above this long-term trendline, a swift jump to a band of resistance around 3.75% to 4.00% appears likely, potentially pinching equity prices in the process. The bond market remains in a period of seasonal strength through October, however, Fed manipulation of the market is making gains questionable this year.
As posted over the past couple of days, 1655 was a key intermediate level for the S&P 500 due to the support implications provided by the 50-day moving average and horizontal resistance turned support at the June highs. This level was broken on Monday, opening the possibility of a retest of the June low at 1560. Declining momentum indicators and a 20-day moving average that continues to curl lower suggest downside pressures will continue, however, an oversold bounce remains in the cards at some point.