Markets exhaled on Thursday from all-time highs while government bonds continued their rally, pulling the 10YR Yield Index down within one box of a trend reversal
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Equity markets exhaled on Thursday (7/8) from all-time highs; the S&P 500 (SPX), Nasdaq Composite (NASD), and Dow (DJIA) fell 0.92%, 0.76%, and 1.12%, respectively. Note these daily changes are higher than the intraday lows recorded, telling us that markets recouped some of their losses, as Dow futures were down over 500 points before the open. The pullback was, at least partially, attributed to concerns about the spreading Delta variant in other parts of the world along with the ongoing effects of a tight labor market and supply shortages pitted against high economic growth expectations from investors. Given the intraday drawdown, most of the major equity market indices reversed lower into a column of O’s on their intermediate-term Point & Figure charts; however, there were no material support violations. That said, the downtick (thus far) in equities appears to be an appropriate, expected, and healthy exhale after a breathless run to all-time highs. Domestic Equities retain the top rank in DALI and the US Equity Core remains dominant amongst all other groups, as we further examine in today’s Fund Score Overview, but we will see several reversals down across a variety of our bullish percent indicators, suggesting that underlying participation continues to narrow.
We also saw fixed income yields continue their descent on Thursday. The US Treasury 10YR Yield Index (TNX) ticked lower in a column of O’s to 1.275% on its default Point & Figure chart, now resting on its bullish support line. Should this trend violation occur, it would add further technical evidence of the shift in sentiment regarding potential rate hikes. Below in today’s (7/8) report we further unpack this unique fixed income environment.
