Stocks had a big rally yesterday, with the S&P 500 up 2.45% and the NASDAQ 100 ETF QQQ rising by 2.33%. The rally wasn’t a surprise, given we have seen these countertrend rallies follow OPEX regularly. What was surprising was how quickly the market rallied. I’m skeptical of this rally continuing now. I was only looking for a gain to around 3,800 on the S&P 500, and most of that rally was already fulfilled. I think we could even refill the gap below 3,700, maybe as soon as today.
VIX
The VIX was hardly down yesterday, despite the big rally, dropping by less than 1 point to close at 30.20. I would have expected a more significant drop in the VIX given the big rise in the S&P 500. This is all contributing to my suspicions about this rally.
Of course, today will be Jay Powell’s turn to go in front of Congress, which presents a risk to equities.
Financial Conditions
Additionally, financial conditions tighten yesterday, as measured by the IEF/LQD ratio, and usually, when spreads widen, it is not favorable for stocks. The ratio hasn’t broken out to new highs, but it needs to be watched closely.
Meta
Meta (NASDAQ:META) keeps dropping, falling another 4% yesterday. I don’t know what is going on here. Clearly, something is not good. Maybe they shouldn’t have changed the name from Facebook. However, the $155 level is essential from a technical basis because if support breaks, the next region for support will come at the pandemic low of around $139.
Roblox
Roblox (NYSE:RBLX) seems to again be in a position to break out as the RSI nears potential resistance levels and the stock price approaches a downtrend. This is the stock’s second attempt since June to breach that trend line.
Anyway, that’s going to be it for today.