Treasury Yields surged for the sixth straight day Tuesday and interest rate-sensitive sectors like Utilities, Real Estate, and Technology pressured the S&P 500 Index into a large 2.04% drop.
89% of stocks in the S&P 500 Index finished in the red, with basically the only smattering of green coming from Energy stocks and a few Consumer Staples. This was the worst day for the S&P 500 Index since May 12th, and only the 5th time in the past year where the venerable index closed lower by at least 2%.
The month of September will be the first red month for the S&P 500 Index in 8 months; and despite what has felt like an ugly few weeks, we are still trading at late July’s levels.
The S&P 500 Index is trading below its falling 30 day moving average and reverted back to a strongly bearish intermediate posture according to the Market Forecast.
Similarly, the NASDAQ Composite sold off by 2.83% and now has a strongly bearish posture and is also trading below its falling 30 day moving average.
The Dow Jones Industrial Average was the day’s relative winner (-1.63%); the blue chip index continues to have a weakly bullish posture.
The Russell 2000 fell by 2.25%, but is now the only major U.S. equity index to have a strongly bullish posture. The Russell 2000 also finished with a bullish intermediate confirmation signal, but it isn’t considered ideal due to the momentum line at an extreme reading.
10 Year U.S. Treasury yields were one of the day’s big stories; they surged to 3 month highs in just one week and settled at 1.53%. Bonds were down Tuesday as a result of interest rates. Foreign bonds now have an oversold cluster and High Yield bonds disconnected from oil prices and traded poorly.
The U.S. Dollar is a similar story to Treasuries. Both continue to trade above rising 30 day moving averages at 3 month highs and have strongly bullish intermediate postures. The strength in the U.S. Dollar pressured gold and oil prices lower today; but from an intermediate perspective, oil is still strong and gold is weak.
Energy was the only sector to finish higher Tuesday (+0.34%), but couldn’t offset weakness from larger market-cap sectors like Technology (-2.96%) and Communications (-2.44%).
Utilities and Real Estate have sold off so much that they both have 3 straight days of clusters; Utilities is down 14 trading days in a row, which is incredibly rare
Our trade application example featured selling a put on Sempra (SRE) due to its oversold cluster signal on a daily candle chart combined with a dividend yield that is currently attractive on a historical basis
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Stock Market Outlook Video (for September 29) – News and Analysis
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