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Stocks finished the day flat; they had been down earlier, but a sell-off in the dollar appeared to help lift stocks higher in the afternoon ahead of tomorrow’s Job report. The S&P 500, for the most part, has consolidated the last two trading sessions and failed for a second day at 4,270.

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If the job report wasn’t tomorrow, then the chart below shows a broadening wedge, which resembles a bear flag, and that would suggest that the next break in the S&P 500 would be lower and towards 4,150. But the job report isn’t likely to change much tomorrow unless it is horrible or hot. While not highly correlated to the official job report, the ADP report took some of the edge off the bond market yesterday. I just don’t think we are likely to see rates on the back of the curve fall all that much from where they are currently, based on the Fed’s projections for rates into 2024 and 2025. Which means the prospects for lower equity values persist.

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Rates have been rising mostly due to the better-than-expected economic data and finally buying into the Fed forecast. In fact, the data from the September 1 job report started this recent leg higher in the 10-year.

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Meanwhile, the yield curve is now in the process of steepening, and it’s very clear when looking at the 3-month minus the 30-year, and typically, once the process starts, it can happen pretty quickly.

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Once that process starts, it seems to continue until completion. This part of the steepening is because the 30-year rate is rising to the 3-month, and that is because the market thinks the economy is on solid footing and the Fed forecasts. But rising rates and a steeper curve will mean that financial conditions tigthen, and that will slow the economy, and that will not be good for stocks, as we know from all of last year.

So, one would think that unless there is some kind of major surprise to the downside tomorrow in the jobs data, the process of the yield curve steepening should continue.

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The chart of the MSCI ACWI ETF looks pretty bad. It has fallen below what had been resistance turned support at $93.25 and is now sitting just above resistance around $90.50. That region around $93.25 was such a tough level for the ACWI to break above, and then when it fell below it in late September, it tried to rebound and failed again. Just not a positive development. At this point, it doesn’t seem like there is much stopping it from falling all the way back to $85.

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Nvidia’s days may be numbered as the stock consolidates and forms a bearish divergence on the RSI. The technical pattern on the price being formed appears to be an incomplete reversal pattern. Unfortunately, we must wait to see when and if that next shoulder forms. It means Nvidia (NVDA) could still go a bit higher first. It doesn’t have to, it could easily drop from here, but if it should go higher first a gap fill at $469 seems like a place to stop.

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