US Treasury selloff leaves equities vulnerable and risks to key S&P 500 support

Intermediate
  • A plunge in prices across US Treasuries over the past 24 hours to reinforce higher yield moves across the UST yield curve seen since September, in reaction to a more hawkish tone from Jerome Powell.
  • This points to still higher yields in the short-term.
  • Furthermore, this price action has put some negative pressure on US equity markets.
  • The S&P 500 future is probing a key up trend line from the summer, below which could see a more negative technical picture.

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US 10yr (Dec’ ’18 contract)

Bear plunge

A plunge lower Wednesday to a new cycle low and through supports at 118-165 and 118-11 and 118-07 and overnight below the stronger target support at 117-285, reinforcing recent rebound failures from 119-00 resistance AND from the mid-September plunge (through key supports at 118-275 and 118-26), to keep risks lower Thursday.

The mid-September break below 119-065 set an intermediate-term bearish trend.

For Today:

  • We see a downside bias 117-22 and 117-15, maybe towards 117-07.
  • But above 117-31 aims for 118-135

Intermediate-term Outlook – Downside Risks: We see a downside risk for 116-015 and maybe towards 114-21.

  • What Changes This? Above 119-00 shifts the outlook back to neutral; above 119-19 is needed for a bull theme.

 

4 Hour Chart

us 10 year

 

S&P 500 E-Mini (Dec’ ’18 contract)

Bull theme intact 

A probe higher Wednesday above 2942.0 resistance to build on Tuesday’s rebound from 2917.5 and AGAIN from the bull trend line from early July, and despite an overnight probe of the trend line, whilst holding  above 2917.5 we see risks higher Thursday.

We still see an intermediate-term bull trend whilst above 2869.5.

For Today:

  • We see an upside bias for 2944.75 and quickly to the new cycle high at 2947.0 and 2950.0, maybe towards 2957.95.
  • But below 2917.5 targets 2907.5, which we would look to try to hold; below aims at 2900.0, maybe 2883.5.

Intermediate-term Outlook – Upside Risks: We see an upside risk for 2950, 2981.5 and 3000.

  • What Changes This? Below 2791.0 shifts the intermediate-term straight to a bear theme.

 

4 Hour SP500 Chart

 

sp 500 

Steve Miley

Editor in chief

Steve Miley has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Market Chartist, the Editor-in...continued

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