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The S&P 500 rose by 1.6%, I couldn’t tell you what the catalyst was, but that is what happened. The only thing that made sense was that the turn was expected to happen given the options cycle playing out, which I mentioned over the weekend.

Typically we can rally for a few days or consolidation sideways following OPEX. Still, we have a lot of events coming up over the next two weeks that should require investors to look to buy puts, specifically ahead of the FOMC meeting on May 4.

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S&P 500 (SPX)

On top of that, the S&P 500 rose to around 4,470 and found some stiff resistance. That resistance happened to be on the Fib grid. This resistance region is on the same trend line that has acted as resistance/support at the end of January, the end of February, the beginning of March, and now. So if we stop here, it makes total sense.

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Anyway, the pattern in the S&P 500 is very unstable, and in fact, I think the algo’s are on repeat mode, as the chart shows below. If so, this whole rally should vanish with a push back down to 4,380 over the next day or so.

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Real Yields

The 10-Yr TIP hit 0% today, and it probably has to go much higher than that. On Thursday, there will be a 5-yr TIP auction, which will help to push these rates even higher.

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TIP ETF (TIP)

Meanwhile, the TIP ETF fell to $120.53 today and the lowest level since June 2020. I don’t see why this ETF can’t drop to $117. What was even stranger was that the TIP ETF was down sharply, and the QQQ was up sharply. Someone was way off base here today, and my guess is it wasn’t the bond market.

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Netflix (NFLX)

The market is trading much lower after hours following Netflix’s horrible results. At this point, we can say the growth story is over. The company reported a new loss of 200k subscribers during the first quarter; estimates were for gains of 2.5 million. Meanwhile, the guidance was worse, guiding for a loss of 2 million subscribers in the second quarter versus forecasts for an increase of 2.4 million. It just doesn’t look good at this point; subscribers seem to be rejecting the recent price hikes. The stock is trading down 25% post-earnings.

Last week, I noted that the stock looked weak and that the second quarter is typically their worse quarter. But these results and guidance even exceeded my bearish expectations. The stock is currently trading at technical support at $260, and it seems highly likely this stock is going to fill the gap from January 2018 at $227. All gaps get filled, I guess.

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Disney (DIS)

Disney is trading lower in symphony with Netflix as it should. It probably has further to fall as the stock is falling below support at $127, which I mentioned last night, and should now be on its way to $117.

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