Dollar strength pushes Yen to 40-year low despite intervention warnings
The S&P 500 managed a modest gain on Wednesday, but don’t let that fool you — the index has essentially gone nowhere this week. It’s been consolidating sideways, stuck in a tight range that sits within last week’s trading range. In other words, it’s consolidating, not recovering.
What concerns me is the pattern that’s forming. It looks a lot like a bear pennant, which, if it plays out, suggests the next move in the index is lower — and potentially by a meaningful amount. The Fibonacci extensions on a break of that pennant point to levels well below where we are now.
The moving averages continue to tell the story. The 10-day exponential moving average has been a ceiling that the index just can’t seem to punch through, and the 200-day moving average reinforces that resistance from above. Until the index can reclaim those levels, the path of least resistance remains lower.
Credit spreads are quietly confirming the risk-off tone. Even on a day when the S&P 500 was green, high-yield credit spreads actually widened. That divergence — equities up, credit deteriorating — is not the kind of thing you want to see if you’re looking for a sustainable rally. There’s a key level on the CDX high-yield index that keeps getting tested and rejected, which is worth watching closely.
One of our favorite liquidity gauges, Wingstop (NASDAQ:WING), dropped to its lowest level since September 2023. The stock has been absolutely hammered from its peak back in late 2024. What makes it interesting is how well it has correlated with Bitcoin over time. It’s not a perfect leading indicator, but more often than not, Bitcoin tends to follow where Wingstop goes — and right now, Wingstop is not painting a pretty picture for crypto.
Speaking of Bitcoin, it appears to still be working through a bear flag pattern. Maybe it sees another push toward the upper end of the channel, who knows, but if the pattern holds, it’s unlikely to stay there for long. And Wingstop seems to agree.