Treasury Yields surged for the sixth straight day Tuesday and interest rate-sensitive sectors like Utilities, Real Estate, and Technology pressured the S&P 500 Index into a large 2.04% drop.
89% of stocks in the S&P 500 Index finished in the red, with basically the only smattering of green coming from Energy stocks and a few Consumer Staples. This was the worst day for the S&P 500 Index since May 12th, and only the 5th time in the past year where the venerable index closed lower by at least 2%.
The month of September will be the first red month for the S&P 500 Index in 8 months; and despite what has felt like an ugly few weeks, we are still trading at late July’s levels.
The S&P 500 Index is trading below its falling 30 day moving average and reverted back to a strongly bearish intermediate posture according to the Market Forecast.
Similarly, the NASDAQ Composite sold off by 2.83% and now has a strongly bearish posture and is also trading below its falling 30 day moving average.
The Dow Jones Industrial Average was the day’s relative winner (-1.63%); the blue chip index continues to have a weakly bullish posture.
The Russell 2000 fell by 2.25%, but is now the only major U.S. equity index to have a strongly bullish posture. The Russell 2000 also finished with a bullish intermediate confirmation signal, but it isn’t considered ideal due to the momentum line at an extreme reading.
10 Year U.S. Treasury yields were one of the day’s big stories; they surged to 3 month highs in just one week and settled at 1.53%. Bonds were down Tuesday as a result of interest rates. Foreign bonds now have an oversold cluster and High Yield bonds disconnected from oil prices and traded poorly.
The U.S. Dollar is a similar story to Treasuries. Both continue to trade above rising 30 day moving averages at 3 month highs and have strongly bullish intermediate postures. The strength in the U.S. Dollar pressured gold and oil prices lower today; but from an intermediate perspective, oil is still strong and gold is weak.
Energy was the only sector to finish higher Tuesday (+0.34%), but couldn’t offset weakness from larger market-cap sectors like Technology (-2.96%) and Communications (-2.44%).
Utilities and Real Estate have sold off so much that they both have 3 straight days of clusters; Utilities is down 14 trading days in a row, which is incredibly rare
Our trade application example featured selling a put on Sempra (SRE) due to its oversold cluster signal on a daily candle chart combined with a dividend yield that is currently attractive on a historical basis
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Stock Market Outlook Video (for September 29) – News and Analysis
Twitter: @BrandonVanZee and @MarketScholars
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.
