The S&P 500 Index fell 1.26% on Tuesday as Fed Governor Brainard spooked markets with hawkish comments about a more-aggressive Fed balance sheet reduction. And the selling appears to be trickling overnight into futures.
Approximately 28% of the S&P 500 components finished higher (mostly stocks in defensive sectors) on Tuesday. And the VIX Volatility Index popped back up above 20 after the stock sell-off; 20 has been a battleground area for the last week or two.
The S&P 500, Dow Jones Industrial Average, and NASDAQ Composite all closed with a bullish intermediate confirmation signal. All four major indices are trading above rising 30 day moving averages. These will be on our watch radar. The Russell 2000 was the day’s worst performer (-2.36%) and now has a weakly bearish intermediate posture.
The U.S. 10-Year Treasury yield rallied to 2.56%, a new multi-year high. Long Term U.S. Treasuries fell 2.26%, Foreign Bonds fell 0.86%, and High Yield Bonds fell 1.30%; all now have bearish Market Forecast intermediate postures.
The U.S. Dollar rallied 0.53% (its fourth straight positive session); it’s now at a new multi-month high and has a strongly bullish intermediate posture. Dollar strength led to weakness in commodities; gold fell 0.63% and oil fell 2.68% (both now have bearish intermediate postures)
Energy has now been atop the Sector Selector tool for a full 3 months; Utilities and Materials are also showing intermediate strength. Financials, Industrials, and Energy all now have weakly bearish intermediate postures, but only Financials are trading below a falling 30 day moving average
Our trade application example featured a selling a put on Polaris Inc (PII) due to its recent sell-off giving it an oversold cluster (on weekly chart) and putting it closer to favorable long-term dividend yield territory if it were to fall an additional 20% where we selected our strike price
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The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not represent the views or opinions of any other person or entity.
