S&P 500 flirted with 4,115 again after that great intraday HYG reversal portended downside volatility when cyclicals didn‘t really point higher. The day ended with a profound deterioration in market breadth

and unappealing sectoral overview

Tech upswing invited selling interest, while value and especially Russell 2000 turned strongly south. ES though had been relatively resilient given both manufacturing and retail sales hits, and today‘s data in housing weren‘t slated to bring a disaster. The figures are obviously more optimistic than they would have otherwise been if the market could clear itself by bringing in more supply, which isn‘t though a realistic expectation when mortgage rates have been locked low in a different era of 2020-2021.

Similarly, retail (WMT, TGT) earnings aren‘t truly concerning – they merely underline the weakening consumer and more bleak expectations for Q2 figures. The same for real estate not being out of the woods.

For now, the stock market advance remains concentrated in the top 10 (chiefly tech) stocks, and Wednesday‘s prospects aren‘t disastrous – with no overnight fall even if USD broke higher to 102.80, I‘m looking for another tight range muddle through day where 4,149 followed by 4,154 stand in the way, and a close clearly below 4,136 would be a nice bearish daily victory in this long-lasting tight S&P 500 range. Watching today‘s rotations chiefly for clues.

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Let‘s move right into the charts (all courtesy of www.stockcharts.com).
 

Credit Markets

Rising yields haven‘t brought down stocks much, let alone tech with the ever-deteriorating breadth there. Today will mark a pause in the risk-off stance, not a reversal higher to last.

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