The Quotedian - Vol VI, Issue 28 | Powered by NPB Neue Privat Bank AG
"Price reactions and pullbacks allow you to determine whether your stock is a tennis ball or an egg."
— Mark Minervini
** Housekeeping **
Very short update today only. Make sure to tune in on Sunday for the monthly wrap-up!
Fireworks on Wall Street yesterday, as the mix of big tech earnings not disappointing (ex-AMZN after hours) and economic data which the market wanted to interpret as “goldilocks”. The outcome was this intraday chart (S&P 50) of relentless buying,
and this sea of green:
Market breadth with 85% stocks up on the day (S&P) was outstanding.
Asian markets continued with Wall Street’s flamboyant bullishness, showing solid gains across the entire region and European index futures suggest the same will happen in our markets here once cash trading opens.
Meanwhile in bond markets did not quite share equities’ bullishness, with yields jumping as Core PCE (4.9%) came in above expectations (4.7%), which not only made the entire yield curve shift higher,
but also made Fed fund futures reassess their outlook and take out one full rate cut (25bp):
Probably also worth mentioning here that this morning the BOJ scrapped its guidance on future interest rate levels and called for a long-term review of its policies while keeping its main stimulus steps unchanged. This was mostly interpreted as dovish and led to JGB rallying and (obviously) JGB yield crashing.
Here’s the chart on the 10-year JGB … if there was ever a descriptive picture of a manipulated market, I think this would be it:
The fore-mentioned increase in US yields then also meant that the Greenback found a bid against all other major currencies:
Also, due to the BoJ’s “review” of policies and the subsequent drop in bond yields, the Japanese Yen is getting a beating as I type:
Ok, that’s it already - told you it was going to be short (a 3 min read according to Substack).
Tons of figures out during the day today, so brace for some possible volatility.
Enjoy the weekend and as fore-mentioned, do not miss Sunday’s edition of your favourite newsletter where we look back at the month just gone by.
CHART OF THE DAY
And now to reveal the reason for today’s title of The Quotedian “Bear Trap”.
Actually I think, a picture (and a pic-in-pic) will be enough to explain. Let’s try:
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