I banged on a couple of pots and pans last week to alert you to the fact that I thought the bears were about to come out of hibernation.
The price action this week has increased my conviction that the January rally may turn out to be a lot of hot air and the long-term downtrend could reassert itself.
US two-year bond yields have catapulted higher in February from a ridiculously low 4.04% to a far more realistic 4.66%.
You would expect stocks to struggle as future rate expectations adjust higher, but they have been remarkably resilient so far.
That may change if more selling emerges and the S&P 500 dips back below the 200-day moving average at 3,950 (currently 4,090).
Below there, I expect the downside momentum to increase substantially.
We spend most of our time scratching our heads as we analyse markets, so I love it when there are clear lines in the sand so you can start making decisions.
I’m happy to change my bearish view if the S&P 500 heads above 4,350 and the ASX 200 creates a new all-time high. But until then, I’m leaning bearish and will increase my bearishness as support levels below the market give way.
I gave you a detailed look at the set-up last week, so if you missed it, I recommend viewing it here before you watch this week’s instalment.
Some people have said the last few Closing Bell’s were difficult to hear, so we’ve made an effort to rectify the situation this week. If you’re still having trouble hearing the video, even with your volume turned up 100%, please let us know at support@fattail.com.au.
Enjoy.
Until next week,
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Murray Dawes,
Editor, Money Weekend
