Title: Rally Under Pressure: Bond Rate Surge Signals Market Dip Ahead.
This video script was prepared on Wednesday, November 13 at 05:47 (EST) at the link in the video description.
If you want to see the market forecast first, go to slide 6.
Howdy, Swings!
bond yield and china economy did not help the market and the market closed lower.
Even though Bond and stock going lower was our forecast, which came true, Stock market support was stronger than expected to minimize the downward pressure, which was a negative sign for the market.
But to my surprise, In particular, the market recovery started 1pm without any event was surprisingly strong.
Will the market get over the downward stress and keep going up?.
Let's take a look at Fullhapce’s Daily swing market forecast and explore the possibilities.
Let's review Daily Market Index Movements.
Market went lower, 10yr bond yield rate was jumped by ~3%.
SPX: 5983.99, -0.29% down.
Dow Jones: 43910.98, -0.86% down.
NASDAQ: 19281.4, -0.09% down.
Russel 2000: 2404.7, -1.79% down.
Ten-year bond interest rate: 4.43, 2.88% up.
Let's look into Daily sector performance.
Tech was an area of outperformance on Tuesday.
Other top groups included insurance , consumer staples, retail, auto retailers, and travel/leisure.
There was weakness in chemicals/materials, semiconductors, capital goods, healthcare, banks, housing, and utilities.
Let's take a look at some of the reasons why.
On Tuesday, stocks took a hit because investors were worried by a significant increase in Treasury yields.
The negative attitudes and fears related to China's economic state further contributed to the downward pressure on stocks.
However, there was some good news as well.
The earnings season, which started at the end of November, began positively.
Specifically, Home Depot, a well-known retail company, reported better than expected earnings and also increased its future earnings forecasts.
This type of report is known as a "beat-and-raise" release.
Here are the Things to consider.
The negative feelings towards China's economy continued to grow.
This was due to the ongoing dissatisfaction with the Chinese government's recent announcements regarding their fiscal policy and was worsened by changes to Trump's national security team.
The Organization of Petroleum Exporting Countries (OPEC) cut its expectations for oil demand once again.
Infineon, a German semiconductor company, gave extremely disappointing predictions for its future sales.
Bayer, a German multinational pharmaceutical and life sciences company, experienced a considerable drop in its stock price during Tuesday's trading in Europe.
This happened after they announced their earnings and exposed challenges in their Crop Science department.
A significant portion of the Home Depot's success was due to the recent hurricanes.
However, the company's management expressed concerns about the general economic conditions.
The company THS's results and future predictions were negatively affected by a product recall.
The company also pointed out that even without considering the recall, they faced an increasing number of challenges in the recent quarter due to worsening economic conditions.
Here we present the Daily Market Forecast for swings.
The weekly market has bullish potential, but volatility has increased.
The daily potential is still bullish, but with increased uncertainty and volatility, I wouldn't be surprised to see a temporary trend reversal today or tomorrow.
Expect volatility to be high in early trading tomorrow when CPI is released.
Looking back at today's market action, the SPX opened slightly higher at 6010 but soon fell back to 5960.
It quickly recovered to 6000 after 1:00 pm, but closed lower at 5980.
Investors saw strong support at SPX 5960 and strong resistance at 6000, and there was a lot of hesitation over the last 3 days as they waited for the next event, CPI.
Our sector indicators seem to be showing a temporary downtrend that could send bonds higher and stocks lower.
Stocks, bitcoin, biotech, and small caps may partially reverse yesterday's move in the opposite direction.
It's hard to predict due to the high uncertainty, but on Wednesday, the CPI results could fall short of expectations and SPX could move between 5970 and 6015.
Then, if the PPI results on Thursday are favorable for the market, the market will show an uptrend.
Let's look at some additional insights.
When it comes to stock markets, there's a lot of excitement building around the policies of President Trump.
However, this excitement may be reducing the impact of other important factors like interest rates and decisions made by the Federal Reserve (the US central bank).
For now, those who are positive about the stock market (bulls) are dominating the conversation, thanks to optimism around Trump, favorable timing, and a good economy.
However, there are some big questions and contradictions underpinning this Trump-related optimism:
First, how will the government manage to reduce taxes significantly without causing a budget deficit – that is, without either cutting spending deeply and sustainably or introducing big new import taxes (tariffs)?
Second, if the tax cuts do cause a budget deficit, wouldn't it mean that the government would need to borrow more, which would push up interest rates (yields)? This is a problem as the country's finances are already strained and there isn't much room for further reckless spending (profligacy).
The prices of shares on the stock market are already very high, and any increase in interest rates would only make this situation worse.
Let's look at the counterarguments.
The opposing scenario suggests that The opposing scenario is that CPI result boost the market rally and SPX moves between 6000 and 6035..
The rationale for this scenario is as follows.
People are discussing that according to the latest New York Federal Reserve survey, the anticipations for the inflation rate in the United States have decreased universally.
Home Depot, a well-known home improvement company, began the earnings season in November on a high note with outstanding sales and earnings per share (EPS).
They also elevated their financial expectations for the full year.
But Home Depot wasn't the only business with good news.
Live Nation Entertainment, oneMedical, and Shopify also delivered strong earnings reports for the third quarter, indicating that consumers are spending money and companies are profiting.
Despite providing a weak sales forecast, Infineon, a major player in the semiconductor industry, managed to see its stock price rise in Europe.
This implies that the industry, which is crucial for producing parts for cars, industrial machines, and analog devices, may have hit rock bottom and can now only improve.
Tokyo Electron, the Japanese electronics company, announced better-than-expected earnings and raised its forecast for the year.
The company's management also hinted at optimism about the future of artificial intelligence, personal computers, and smartphones.
Given the current rally, I think it is possible that the opposite scenario could happen unless the CPI results are very bad.
Those who agree with the opposite scenario can see it as an opportunity to buy more stocks with safeguards like stop losses in place.
The Conclusion is as follows.
We believe that a full-blown rally has begun and are now watching out for the possibility of a temporary pullback.
Traders who agree with our forecast may be wise to understand this pullback as temporary and buy now in anticipation of the next move higher.
Traders may also be wise to consider both our main forecast scenario and the opposite scenario to effectively manage risk.
Thank you for watching.
Fullhapce Intelligence, the best investment partner for swing traders.