The S&P 500 finished the day lower yesterday by around 70 bps, despite being up more than 1% in the overnight trading session. The gains evaporated as the dollar surged and rates rose sharply. The S&P 500 is trading opposite the dollar at this point, and it seems like when the dollar falls, the S&P 500 rises and vice versa; I don’t think there is much else going on here.
The S&P 500 is getting supported by Friday’s option expiration date, and that big gamma level is at 3,700. But come Friday at 9:30 AM, a lot of gamma is going to roll off, and that means the S&P 500 will lose the support, and if the dollar continues to rally, the S&P 500 is likely to drop.
The S&P 500 may even start to drop before that, especially if rates and the dollar continue to climb. There is a nice-looking bear flag in the S&P 500 futures, which would indicate the market drops back to around 3,640 in the short-term and potentially back to 3,600.
Additionally, yesterday we saw a big move down in the TIP ETF, and that ETF is close to breaking down and through support at $104.70. The QQQs have detached from the TIP ETF a bit, which suggests the QQQ could drop. But more importantly, if the TIP ETF breaks lower to a new low, the QQQ should not be far behind and on its way to a new low.
2-Year
The 2-year traded up to 4.56% percent, and I guess it could rise to around 4.85% over the next couple of weeks.
Tesla
Tesla (NASDAQ:TSLA) reported results, and I thought they weren’t good. The company missed revenue, missed automotive gross margins, missed automotive revenue, and missed adjusted EBITDA. Stocks valued like Tesla can’t afford to miss, and they did. I’m surprised the stock isn’t down more, but support at $209 is critical, and if Tesla should break that support level, it could result in the shares falling back to $180.
