Treasury rates were also sharply higher on the day and got an extra boost following a pretty tepid 7-year Treasury auction. The 10-year is approaching that resistance region around 4.7% again, and the last time the 10-year rate was here, the S&P 500 was trading closer to 5,000, so a continued gain in rates would likely push equity markets lower.
Meanwhile, the USDCAD moved higher today and has moved back above the 1.37 region. The big level we are watching here is the 1.38 area. A break above 1.38 could be a big risk-off signal for equities, as that has been a key level in the past for the USDCAD.
Meanwhile, the S&P 500 closed down around 75 bps, and at the same level, it was on the day of the big bearish engulfing candle. There is support at 5,260, so for this sell-off to have any legs, the S&P 500 will need to gap lower tomorrow at the open and undercut that support level, which can setup a test of 5,200.
Things could get more interesting at that point, mainly if a rising wedge has formed in the S&P 500 since February 2023. The zone of support is in the 5,150 to 5,200 region. Indeed, from a longer-term cycle standpoint, the time has come for a trend reversal, and if support breaks on the pattern, that trend change could be here sooner than we may think.
The bears certainly have the ball in their court to start the day, with Salesforce trading lower by more than 16% following its results tonight. I haven’t had the time to look at those results, though. The stock appears to have completed a giant descending triangle and has now filled a gap from November around $225.
There will be a lot of data starting tomorrow, so we must monitor the data to determine where the charts are likely to go.More By This Author:Bearish Signs Are Emerging Across The Market
Is Nvidia Worth 35x Times Sales, History Says No
Stocks Face Another Tough Week Of Important Inflation Data
