To The Moon

The equity market once again erased the gains of the morning

The Dow Jones Industrial Average, which was up 1.3% at 10:20 a.m., ended the day down 90 points, or 0.3%. The S&P 500 fell 0.80% to 3,665.78. The Nasdaq Composite lost 0.61% to close at 10,614.84.

 Stocks faded as Treasury yields rose...

The benchmark 10-year Treasury yield hit a high of 4.239% on Thursday, trading at levels not seen since 2008.

 Note to mention the 2-year Treasury yield reaching 4.6%.

We have here a general context unfavorable to the continuous rise of the equity market:

• With a rate hike and a Federal Reserve that continues to try to calm inflationary pressures not seen in decades.
• Without forgetting the dollar which largely beats its peers. (the dollar hit Thursday its highest level against the Japanese yen since 1990).

But all would not be gloomy:

• Indeed, the major averages are still up more than 2% for the week.
• Corporate earnings (AT&T and IBM), meanwhile, are generally holding up, with some notable exceptions.
• 88 S&P 500 companies reported earnings, 75% of which came in above expectations.

In summary, rising Treasury yields...along with the lagged nature of monetary policy, would limit the market to a sustained recovery...

Friday is the monthly expiry, expect volatility and adjust your trading accordingly.

Here are the levels for $S&P 500(.SPX)$ for reference. (no buy/sell advice).

• 3700 would be the key level.
• 3600-3650 lower zone
• 3830-3900 upper zone

Thanks for reading.

@TigerStars 

@Do_Trading twitter for daily update and post.