The Algo’s may be on repeat.
It is strange how the S&P 500 looks very much like it looked between April 21 and May 4. Is it exactly the same? No. It is very similar, though.
If it is the same pattern, I had believed in April it had been a bear flag, and it is again a bear flag now, then this consolidation is near its end. There are three touches of the top line and two touches of the bottom line, just like in April. This would suggest that the next touch of the bottom, should one, would result in a lower break and put the S&P 500 on a path to the low 3,700s.
If we look at it another way, taking the S&P 500 of today and pushing it back to line up with the S&P 500 of April and overlay the two chart lines, you can see the similarities, and it is worth thinking hard about this because what came next in April and May was a 10% drop.
We need the S&P 500 to rise above 4,025 to invalidate this pattern.
TIP
The TIP ETF made another new low yesterday and is worth noting, as the gap between the QQQ and the TIP is growing again. This leaves us left to wonder if the QQQ will ever catch down to the TIP.
2-Year
The 2-year rate is stuck at 3.51%, around the highs, where it has been since September 1. It looks like it is merely consolidating before making its next move up.
JP Morgan
JPMorgan (NYSE:JPM) has had two powerful trading sessions, as banks generally were up yesterday. I’m unsure if it was due to a rise in rates or the flattening yield curve. But they were up. I don’t see where JPM is going. It can’t break down, it can’t break out, and there is still a month to go until earnings. Maybe it is just stuck between $110 and $123 for the time being.
Microsoft
Oddly, Microsoft (NASDAQ:MSFT) is trading not that far off its June lows, while the Nasdaq 100 is trading comfortably above its June lows. Is this an indication that Nasdaq sell’s off further? Or is it that Microsoft is oversold? It is tough to say, but the stock has only touched oversold levels on its RSI once to this point; it is probably the case that Microsoft still has further to drop before finding a bottom.
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