Mid-week rest is quite refreshing. Let's advocate to do this one per month: no Wednesday trading, close markets.
Despite some bullish calls from various market commentators recently, Steve and I have always viewed the latest market rally as a corrective bounce in a longer term downtrend. If you listened to my weekend newsletter I stated that a gap up on Monday in response to the G20 Tariff pause would be a good opportunity to sell and lighten up on long positions. On Monday morning just after the opening bell I sent out an alert on the SPY system re-iterating that the big gap up on Monday morning would be a good opportunity to trim/lighten up on SPY and other longs. Boy has that played out especially with today's huge sell off. Also on the weekend I said to watch the VIX indicator, I said that the lower Bollinger Bands would likely act as support and that's exactly what happened, the VIX tagged the lower Bollinger Bands yesterday morning and that was the low. All year long each time the VIX has tagged the lower Bollinger Band it has rallied - this is something we also discussed early this year. See VIX Chart
Today of course the market was scared by the move in bond markets, the yield curve (10 Year / 2 Year) fell once again and is getting close to par. It won't take much for it to go negative now. Remember I discussed the Yield Curve on the weekend and in Monday's newsletter. Early this morning Banks/Financials and Transports were extra weak in response to the bond market as the flattening yield curve hurts their profits.
One chart that someone pointed out to me earlier today was the FLOT ETF, which is Investment Grade Floating Rate Bonds. HERE's a Chart, as you will see below there was a HUGE move in this instrument over the last couple days, even yesterday, this was a pre warning for the market of the issues underneath the surface in the credit markets.
As far as the market, you know our bigger picture is one of caution/bear market.
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