Financial Markets Newsletter

S&P 500 Vs 30Yr Treasury Yields

Summertime Convergence

The stock market continues to grind higher as we approach the Fall months and the Presidential election. The push higher over the last several weeks is signaling a sharp rebound in the economy which may be wishful thinking. Several companies claim to be close to a vaccine for COVID-19 but my understanding is that confirming […]

Read More

Divergence Continues

The divergence between long-term Treasury bonds and stocks continues to keep going. The chart below shows how pronounced this divergence has become as the S&P continues to edge higher. Most times, these two will trade in tandem so the bond market is trying to tell us that the economy will remain in slow growth for […]

Read More


The S&P 500 continues to hover below its June 8th high (3,234) as the earnings season kicks off and the country struggles with a new wave of coronavirus cases in the southern states. The uptrend from the March low is stretching valuations and continues to be driven by a handful of large-cap technology stocks which […]

Read More

Rebound Madness?

The rebound from the March low continued this week as the large-cap technology stocks power the S&P and NASDAQ higher. As the chart below shows, the indices have become heavily concentrated in just a handful of names as the breadth of the market narrows. More than 95% of tech stocks were above their 50-day averages […]

Read More

Rolling Thunder

The S&P chart below shows that prices have continued to weaken and roll lower after a 4-day island top was created in the first week of June. This type of formation indicates an exhaustion of buying which traps buyers who are forced to liquidate positions at a loss. Prices tried to rally in mid-June but […]

Read More

Chart of the S&P 500 Index

Weak Sauce

Last week we had a break in trend that was significant as it marked what is likely the end of the retracement (or bounce) from the March low. The island top in the chart below is rare in the longer time frames and the exhaustion gap we saw in Friday’s trading session is a sign […]

Read More

SPX - S&P 500 Index

Hero To Zero

Many things went from hero to zero this week as the Fed threw cold water on the prospects for a 2020 recovery and the market rolled over in a fashion that warns of significant downside. Last week, we had good news with a much better than expected jobs report and now the cold reality of […]

Read More

HedgEYE Star Wars

ACT III: A New Hopium

A very significant week as the economy had a huge surprise regarding a comeback on the jobs market (see below) as certain states allowed their economies to re-open for business. There is even an argument that next month will also improve as New York and California have only allowed a modicum of their economies to […]

Read More

S&P 500 Index Chart

Over The Line

The stock market has refused to re-test the March lows which means that the Trillions in central bank stimulus and bailout programs have buoyed the stock and bond markets. In the chart of the S&P 500 index below, we can see that the 61.8% retracement level has been surpassed which raises the odds that the […]

Read More

Jerome Powell

Sweating Bullets

Jerome Powell gave a speech on Wednesday at the Peterson Institute for International Economics that should have been called, “The Fed Is Out of Bullets”. The speech was a bit sad as the Fed is normally optimistic about about their ability to oil the gears of liquidity and lay the foundation for a recovery but […]

Read More