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Stocks Stepped Higher Last Week, As Bonds Broke Down

Published 11/10/2019, 02:52 AM
Updated 07/09/2023, 06:31 AM

In a week of dull trading, the stock market continued its upsurge, with the market focusing on positive news about the trade war, as I pointed out in the latest Market Week show. The S&P 500 (SPX) rose 26 points to 3,093, an increase of 0.8%.

The Chinese government announced that they had reached an agreement with the US government to release some tariffs on each other’s goods, as part of a phase 1 trade deal.

Yet President Trump responded that, "China would like to make a deal much more than I would. They’d like to have a rollback. I haven’t agreed to anything.”

S&P 500 (SPX) Daily Chart

Our approach to technical analysis uses market cycles to project price action. Our analysis of the S&P 500 is that the index remains bullish. However, for this coming week, we are looking for a small down week into its minor support zone. Our target is 3060.

Let’s also take a look at the bond market, which moved inversely to stocks last week. The US 30 Year T-Bond Futures moved nearly 3% lower last week to 155’16, as yields rose to over 2.4%.

30-Year Bonds Futures Daily Chart

Based on its market cycles, our analysis is that the bonds have broken the low from which it started its current cycle. If the breakdown holds, this is a bearish indicator, as this is still early in the cycle and there is a very long time left for bond futures to move lower. For the coming week, we are looking for a bounce and then fail again for treasury futures.

For a more detailed analysis of both of these charts, check out the latest episode of the askSlim Market Week show.

Stocks Stepped Higher Last Week, As Bonds Broke Down

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