SGT Chart Book

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What a Difference a Week Makes

Just over a week ago we were pushing up to the 5% level on the 10-year, and equities were breaking all sorts of support. The markets seem to have ignored the geopolitical risks and the stories of a wider story including which countries were involved and the obvious repercussions. Last week was all about rates and they are driving the stock markets.

 

The S&P500 saw its best week since November 2022, the index gained 5.9%, now up 14% for the year.

 

The yield for the 10-year ended the week at 4.55%, marking the latest drop since March.

 

This pullback in yields offers stocks some support, while higher rates affect corporate and individual’s borrowing costs and higher rates also make stocks look less attractive versus the risk-free return, raising the bar for riskier assets classes like stocks.

 

This week saw FOMC leave rates unchanged, hinting that the Fed could be done hiking rates, but still watching the data.

 

Friday’s latest jobs data showed, job growth slowed last month, with employers adding 150,000 jobs in October, the smallest gain since June. The consensus is that the economy is pulling back enough for inflation to recede at the same time as not pushing it into a recession, with interest rates nearing their peak.

S&P500

Break of trendline support to break only to make a major U-turn and show a week of aggressive strength. Overhead trendline resistance shown as level to watch.

NASDAQ USA100

Breach of the trendline support gave encouragement to the Bears, before very aggressive buying was seen to retest trendline resistance. While this may hold short term, as market takes a break there seems to be a desire to take equities higher into the year-end despite the fundamental picture.

Apple

With equities rallying, we can see that Apple is now close to testing the top of the down channel. Shares dropped 0.5% as the company reported its 4th consecutive quarter of lower earnings. Apple is the largest component of the S&P500, so it has a larger influence on the index performance.

10-Year U.S. Rates

After testing above the 5% level, we have seen a significant pullback, with breach of trendline support.

USOIL

Oil prices for WTI are now back below the level seen before the Oct 7th attacks on Israel.

Until next week, happy trading.
SGT Trade Desk

Disclaimer: Trading Desk Observations are not trade recommendations. The purpose of these charts is to bring to your attention potential chart patterns you may wish to monitor.

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