S&P 500 favored defensive sectors and semis yesterday, with financials significantly coming back too. The aftermath of 20y Treasury auction provided the first sign of bearishness in stocks getting excessive (as you can see from the following two charts‘ divergence that reminds me of a back then talked divergence on the daily when it came to the late Oct bottom formation when e.g. ES made a lower low whereas NDX did not), and Beige Book aftermath only underlined that.

Bringing you the preview of action late yesterday (by Ellin) and European morning (by myself) from our intraday channel, which will make it clear as to why today‘s stock market (and especially Nasdaq) outlook isn‘t bearish (forget not VIX retreating to 14.79 when I called for it in our channel not to overcome 15.60 when it was way over 15.20) – and the same goes for my gold $2,005 green light for the buyers given over in the other premium Telegram channel…

With both chart (ES and Treasuries aggregate) in full size here (courtesy of MT4).

Forget not how my lately so often discussed USD 103.50 was respected in this budding yields reversal, semiconductors leading Nasdaq higher, and ES upcoming battle in the next 1-2 weeks to keep above the early Jan lows before launching for fresh highs. The dialing back of Fed rate cuts optimism simply continues, with Jan rate odds being now only 2.6% (8.3% a month ago), and Mar rate cut (25bp) touching yesterday 51.9%, as we speak now 61.4% (bullish stocks as these need yields to retreat badly, and that‘s precisely what we‘re seeing), and one month ago 63.4%.

Correspondingly, the dollar turned at my 103.50 level given as well (courtesy of www.stockcharts.com).

Last but not least, the premium call made over Telegram upon deciding to act on the $2,005 gold level reaching, also panned out well for clients (courtesy of CME Group).

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