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Bonds Prices Spike, S&P 500 Tests Support

It is not every day that good economic news is received poorly. However, that is exactly what is happening thus far in the U.S. session. Instead of the bulls taking control after this morning’s strong U.S. jobs report, the opposite has occurred. Bond yields are skyrocketing and word is on the street: institutions are shifting their liquidities.

What does this mean for short-term traders? Simply put, the FED is getting ready to become aggressive toward the USD. This will bring participants to the market, creating opportunity.

S&P 500 Technicals

For the first time in a long while, the S&P 500 is showing signs of weakness. It has been a bad week, punctuated by today’s rout. For March E-mini S&P 500 futures, things are becoming serious.

March E-mini S&P 500 Futures (ES), Daily Chart

Traders and investors are a paranoid bunch. Sentiment toward the March E-mini S&P 500 has shifted seemingly overnight. There are several technical elements on the daily chart that signal a potential change in the prevailing winds:

  • Price is testing the Bollinger MP (2791.50) for the first time since November 20, 2017. Since that time, every dip has attracted buyers.
  • A pending Bollinger MP/Daily SMA crossover is present. If the crossover develops, it will be the first since the current bull run began in late November 2017. A crossover illustrates a change in the prevailing sentiment — not necessarily the beginning of a downtrend, but at least a slowing of the recent bull market.

Overview: Every dip in this market has attracted buyers. In my opinion, this one is likely to exhibit the same tendency. A gap up on Monday’s open is a strong possibility if the downside support levels hold. If not, we may see a prolonged consolidation phase as the market decides which way to go.

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Shain Vernier
US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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