Sunday Night Chartology: Special Champ Kind Edition

The Yinzer Analyst is on the road, so just a short post tonight because there was no way Friday’s Treasury bull slaughter could go by without comment.  The Treasury sell-off started with Friday’s Employment Report which was so far above expectations that even the most ignorant trader couldn’t ignore what we’ve been talking about for the last few weeks; that rates are going higher and the Fed isn’t even trying to hide the fact from you.  So why dig in and fight it?  But the sell-off in Treasuries and the spreading margin calls led to bleeding throughout the market as profits were taken, positions stopped out and heads buried in the sand.  The sell-off was so brutal we need Champ Kind to come in and moderate this one for us:

Let’s start with the carnage in the Treasury market where the ten year yield blew through the downtrend channel and pushed back to last December’s highs.  Maybe the 200 day moving average can contain it.

TNX

You can see a similar story for the 30 year yield although the sell-off wasn’t nearly as severe:

TYX

And finally Mr. TLT wasn’t feeling the love although he wasn’t the worst casualty by far on Friday:

TLT

That spot was reserved for the gold miners; whether on profit taking or the fact that a Fed rate hike will raise the lease rate and opportunity cost of holding gold (and cutting demand for the metal), the miners took it on the chin and blew through support at $20:

GDX

The possibility of a rate hike spilled over into the defensive yield trade where both REIT’s and utilities took it on the chin:

iyr

XLU

What about the Yinzer Analyst’s favorite trade in long European exposure?

EZUD

You can see on the daily chart that there isn’t a whole lot of support between $38 and $37 and after that we’ve got the upper boundary of the downtrend line at $36-$36.50 to provide support.  Looking at the weekly charts for a longer-term picture you can get a better sense of not just the support at $36 and change but how the uptrend might still be in it’s infancy (fingers crossed.)

EZUW

What about the picture for domestic equities? Using SPY for the S&P 500 you can see on the daily chart that the market was again denied while trying to breakout of the prior ascending wedge pattern leading to a retracement of the year’s meager gains but for now we’ve got prior support at the 50 day moving average at 206 and then nothing until the 202.5 level.

SPYD

Looking to the weekly charts, you can see we remain mired in another ascending wedge (bearish) pattern with more strong support at 205 level, so while the market might open down and drift lower we should expect more stickiness around that level.

SPYW2

Which is confirmed by looking at a weekly chart of the S&P 500 itself:

SPXW

But there were a few flowers blooming amidst the rubble on Friday and not surprisingly found in the financial sector.  The possibility of a summer rate hike has helped spark new life in a sector weighed down by the financial repression of a low rate environment.  With the possibility of higher interest rate spreads and loan growth through an expanding economy, return on assets might finally get itself out of the low range it’s been stuck in for the last several years.  But before you rush out to buy the bank stocks, keep in mind that regional banks are likely to see the biggest boost to EPS (and they outperformed XLF by 150 bps or so on Friday) and even Friday’s rally wasn’t that strong.  Two of the largest regional bank ETF’s (IAT and KRE) saw strong buying pressure give way to late afternoon selling as profit taking kicked in and pushed their one-day CMF scores into negative territory.  Hardly reassuring:

IAT

KRE

That’s all folks, now get out there and try to make some money!

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