Stocks finished the day lower, with the S&P 500 dropping by almost 75 bps, with the NASDAQ Invesco QQQ Trust (NASDAQ:QQQ) falling by around 1.9%. It could have been much worse for the S&P 500 had it not been for the Financial Select Sector SPDR® Fund ETF (NYSE:XLF) climbing by 1.25%.
S&P 500 ETF
Monday, that triangle in the SPDR® S&P 500 (NYSE:SPY) broke, and if we get a move lower Tuesday, it likely results in the start of the next leg lower for the markets, which could amount to a drop of around another 7%; talked about this in more detail in this weekend’s YouTube video.
NASDAQ QQQ ETF
Meanwhile, the QQQ ETF closed just above support at $317. Once that level breaks, as discussed in the video, nothing is holding the ETF from falling to around $300.
Rates
At this point, the yield curve between the 2-yr and the 10-yr is entirely flat. This is a pretty good indication of how the markets are currently thinking about the Fed and its rate hike cycle. It would indicate that the Fed gets to around 2% and is done.
It makes a huge risk for the market going into Wednesday. If the dot plots for 2023 show a rate above 2%, the bond market could be in for a big surprise.
Dow
The Dow had a decent day on Monday, with the help of the financial stocks. There is what appears to be a bearish pattern in the Dow, and once the average breaks support at 32,800, it should result in the start of the next leg down for the Dow.
S&P 500 Growth
Something similar is currently present in the SPDR® Portfolio S&P 500 Growth ETF (NYSE:SPYG). Once it breaks $59, the growth sector is likely to see the start of its next leg lower.
NVIDIA
NVIDIA (NASDAQ:NVDA) has a very similar look to both the Dow and the SPYG, with support at $207.
Apple
Apple (NASDAQ:AAPL) may be already telling us the break is coming. The stock broke down yesterday, falling below support at $155. If $149 goes, the next level is $140.
