Market Misbehavior

Markets rarely reward certainty. They reward process.

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The S&P 500 and Nasdaq finished Thursday essentially unchanged.

But this was definitely NOT an uneventful market.

Breadth continues to deteriorate. Transports remain weak. The 10-Year Treasury yield is pushing toward 5.2%. And while many stocks are struggling, we're seeing some very interesting leadership emerging in healthcare.

In today's CHART THIS, I break down what I'm seeing beneath the surface, plus key setups in crude oil, gold, Apple, Microsoft, Meta, Illumina, Thermo Fisher and Danaher.

Watch here:

The Market Looks Quiet, But Something Is Breaking Underneath | CHART THIS 🎯 Seeking Alpha Premium: SAVE $30Access Quant Ratings, stock analy...

Never confuse the top of the page with resistance.

The 10-Year Treasury yield has pushed above 5%, its highest level in nearly two decades.

5% may FEEL high because investors haven't seen these levels in a long time. But there's nothing magical about 5%.

From a technical perspective, the trend in rates remains higher. And that has implications far beyond the bond market.

This may be the most important chart I'm watching right now.

Fewer than 50% of $SPX stocks are now above their 200-day moving average.

Back in August, about 70% were above their 50-day. Now that number is below 30%.

The indexes can hide a lot. Breadth shows you what's actually happening underneath the surface.

Monday: big rally.

Tuesday: indecision.

Wednesday: big move lower.

That gives us an evening star pattern on the $SPX, a classic three-candle bearish reversal setup.

Add in RSI failing to break above 60, and the attempted breakout suddenly looks a lot less convincing.

The next 1-3 sessions should be important.

The S&P 500 and Bitcoin are suddenly telling a very similar story.

Both just completed an evening star candlestick pattern, a three-day bearish reversal setup suggesting some tactical weakness could be ahead.

Meanwhile, the 10-Year yield has pushed above 5%, market breadth continues to deteriorate, and fewer than half of S&P 500 stocks are now above their 200-day moving average.

In today's CHART THIS, I break down those warning signs, plus some of the stocks still showing impressive relative strength while the broader market struggles.

Watch here:

The S&P 500 Just Flashed a Bearish Reversal Pattern | CHART THIS The S&P 500 reversed lower on Wednesday, completing an evening star...

Breakdown from yesterday's Chart This daily recap:

Tuesday was a quieter, more rangebound session after Monday's big breakout, with the S&P closing almost exactly flat and no real follow through on the move. Underneath the surface, breadth is telling a split story, improving in growth and tech, but still weakening in the broader market.

-Why yesterday's breakout stalled out with no real follow through, and the level Dave's waiting on to confirm it

-Market breadth showing two different stories: improving in growth and tech, but still deteriorating underneath the surface

-The transports still lagging badly, and why that classic Dow theory divergence is the key question heading into Q4

-The yield curve flattening as short-term rates climb, and what that's signaling about more Fed hikes ahead

Bottom line: the rally needs confirmation, breadth is still split, and the transports aren't buying in yet. But good charts are still out there, and that's what to focus on right now.

I cover the market daily on my Chart This YouTube series. Watch yesterday's full episode here:

The Market Rally Hits the Pause Button | CHART THIS After Monday's big surge higher, Tuesday was much more of a digesti...

Ten Year Treasury Yield pushes above 5%, its highest level since 2007.

Probably nothing. 👀

The $VIX can't get below 14, can it? Actually, the VIX has pushed below 14 many times, but it's been a while! 2023-24 saw the VIX get down to 10, and if you look further back you'll see lots of occurrences. Volatility is less about static levels (although I watch a couple pretty closely!) and more above "volatility regimes" and what is high/low for this particular period. Right now, $VIX < 14 is super low!