Stocks finished the day lower, with the S&P 500 falling by roughly 20 basis points. The index started higher, rising all the way to 4,420 and finishing lower around 4,385, an intraday decline of about 85 basis points. The index managed to fill the gap from Friday’s drop at the open and reversed lower once the gap was filled. The weakness came following the ISM manufacturing report, which was worse than expected and suggests that growth may be slowing faster than the consensus viewpoint. This sent yields and spread sharply lower. 

We still have a lower sloping RSI, MACD, and advance/decline line. Additionally, the index appears to want to move lower towards that trend line around 4,330.

Rates

Yields moved sharply lower today following the weaker than expected ISM reading. The yield curve continues to flatten, and while many speculate on the reason, the only that matters is that the flatter curve is telling bonds are worried about future growth rates. Based on the 10-year, it would seem that rates still have further to fall and have not bottomed yet. We could see 1.12% relatively soon.

S&P 500 EW (RSP)

This isn’t good for the reflation trade, and today the RSP started sharply higher up by nearly 1% but managed to finish the day down 15 bps. The RSP is starting to look like a failed breakout attempt, but it is still too early to say for sure.

Bank of America (BAC)

Bank of America looks weak, and it should, given the falling rate and contracting spread environment. However, $37 looks like one place it could stop falling.

Ford (F)

Ford has given back all of its post-earnings gains, with a clear downtrend and support somewhere around $12.75.

Amazon (AMZN)

Amazon had a fairly weak response today to Friday’s big sell-off, with the stock finishing the day flat. It probably doesn’t speak very well of what is to come. Given the weaker growth outlook, it seems lower prices are likely to come, with the next level of support at 3,160.