It was likely that S&P 500 wasn‘t to sustain premarket gains following the opening bell, allowing for locking in open gains in our intraday channel. Bond auctions during the day didn‘t end up too badly, yet it was the yen‘s continued decline spurring BoJ Adachi‘s remarks about being open to hike earlier rather than having to wait to hike more when the Japan inflation horse would have left the stables already via depreciating currency.

This verbal intervention was enough the change the market dynamic, especially in the Asian and European sessions today – the US closing bell action was great, seeing heavy buying focused on Nasdaq. But, the market breadth has a bit deteriorated as the below summary from our channel says – forget not how sharply 10y yield rose on a daily basis (to 4.56%) with 2y touching 5%. The odds of no Fed funds rate change in Sep went up to 54% almost, which is a very meaningful increase on a daily basis.

Hence, Russell 2000 has been and is to feel most pressure (of course, that‘s why I hadn‘t been talking bullishly IWM or even ES lately beyond an opportune dip) – Nasdaq still outperforms S&P 500, which is a good sign, and it‘s not a matter of NVDA only, but as well of ARM and MU with DELL to name a few – see also stock picks from Sunday‘s extensive analysis that had done great

(…) the right sectors are leading (tech, tben all eyes on financials recovering from two Dimon cold water pronouncements (yeah, Friday too), and consumer discretionaries as such (it‘s not about AMZN just – see LULU, ANF, AEO, ELF, RL and even TGT having trouble declining).

The sectoral mix was right in that financial and industrials rose as well while defensives didn‘t crater – and once again, the lower volume or inside bar Friday isn‘t an issue – I‘m counting on tech, and of course NVDA and beyond to lead.

The fly in the ointment were XLF and XLI yesterday, and S&P 500 hasn‘t yet found solid footing. Yields must decisively turn lower for that.

Crude Oil

(Click on image to enlarge)

Oil surprised nicely Friday, and continued doing so Tuesday. Oil stocks also bucked the trend of declining equities (worsening breadth), which in itself is marking risk-off. Day or two of consolidation of latest sharp gains is likely before the market picks a direction – it all depends upon whether BoJ effect on yields wears off within two days, whether the yen carry trade seems some more unwinding or not. USDJPY is thus far clear about that.

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