It won’t be a big week for economic data, but it will be an important one, with a 10-year auction on Feb. 9 and a CPI reading coming on Feb. 10 along with the 30-year auction. Forecasts saw the CPI rising by 7.3% in January versus 7% in December. The 10-year auction may prove tricky and something to watch on Wednesday because it is done the day before the CPI, and there may be some nervousness ahead of that CPI report the next day.

10-Year Yield (IEF)

The 10-year already had a big move on Friday following the strong jobs report, rising to its highest level since December 2019 to 1.92%. At this point, once the 10-year rises above 1.95%, I don’t see anything keeping the yields from rising to 2.15%. The globe is shifting from a low rate environment to a higher rate environment, which means the US will no longer have those external forces keeping yields down.

10-Year TIP (TIP)

The big news on Friday was the run higher in the 10-year TIP rate. The yield broke above resistance at -55 bps and it now has an apparent path to around -30 bps, potentially as high as -10 bps. A move like that will have a massive impact on equity prices. Rising real rates will harm equity market valuations until PEs return to historically normal levels.

S&P 500 (SPY)

At this point, the S&P 500’s RSI is still firmly trending lower, with the indicator reaching the downtrend and unable to push above it. This indicates that the bears are still firmly in control of the market. Meanwhile, the S&P 500 tried to break out and rise above the downtrend this past Wednesday, but it failed to maintain it and instead dropped below.

Additionally, when the index tried to push above that same line again on Friday, it could not hold and finished below. It looks like a failed breakout attempt. Coupled with the negative sloping RSI and rising yields, we should see lower levels this week with a move down to 4,330.

Nasdaq (QQQ)

You can see the same thing when you look at the QQQ chart, especially with the RSI and its attempt to break the upper side of the downtrend. It seems grounded on the idea that rates are going higher and the negative impact this would have on stocks. Based on the matrix below, it would seem that the QQQ may be heading back to roughly $282 over the next few months, which would fill a gap from November 2020.

Amazon (AMZN)

Amazon rose a lot on Friday, and really for no good reason. The results were horrible and the guidance was even worse. The most important metric out of Amazon is the FCF from operations, and that number fell sharply in the fourth quarter. I think the stock’s gains are unsustainable.

When a growth company provides back-to-back-to-back weaker than expected results and guidance, the stock typically doesn't rise, and at this point, there are no indications that the trend is changing. The stock rose right to the bottom of the long-term uptrend, stopped, and reversed lower on Friday. The equity is going lower and is likely to retest, if not exceed, the current lows of $2,800.

Alphabet (GOOGL)

Alphabet reported strong results, and I love the company and own it, but the numbers weren’t as good as they seemed. A significant gain from their equity holdings gave the earnings beat a massive boost, and their TAC number was higher than expected. I think the stock will refill the gap and return to $2,750.

Nvidia (NVDA)

Nvidia was in a downward sloping channel, and it hit the upper end of that channel last week. It is now likely to start reverting to the lower end of that channel this week.

JPMorgan (JPM)

If yields keep rising as I think they will, and spreads avoid contracting, then JPMorgan would have a lot of ground to recover, with two giant open gaps up to $167. But it’s all about yields at this point.

KB Homes (KBH)

Rising rates are probably one of the worst things for these home building stocks, and they have been getting smashed. KB Homes is one and it has been sitting on a massive level of support of around $38.80. But once that breaks, there would be nothing until the $33.90 level.