11/10 Recap

Powerful bounce back today after yesterday’s weak bond auction reaction. While yesterday’s auction should have been bad news considering it was the worst since 2008 and seems to show we have a major problem regarding government spending and the trust for them to get it under control, the SPY continues to amaze.

The weekly, below, shows an attempt to break this downtrend from the summer, will we? It’s too soon to tell, but the price action is very encouraging even as things like consumer sentiment today came in at their worst levels since May.

Small caps aren’t having as exciting of a week as the IWM, below, is still in a downtrend and red on the week. As exciting as this recent run has been, breadth has been awful, it’s all megacap tech doing all the heavy lifting while the rest of the market is full of concern.

Overall caution is warranted, I know we’re up a lot today, but yesterday’s auction was very worrisome, the bond market is never wrong is the old adage, and the bond market is warning us that something just isn’t right. We know the Trump tax cuts roll back in 2025, we’re probably looking at much higher tax rates going forward regardless, but this spending is just out of control by Washington and the bond market has just seen enough. The problem is how does anyone running for office next year start with wanting to reduce government spending? That is political suicide considering that the government is the largest employer in our nation. The bond market seems like it is going to be an ongoing issue going forward with investors demanding a higher return as they see more and more risk to our operation.

Trends

OXY has taken over as the top trend over the past week followed by Unity and Bill in the top 5. On the bearish side some of these bad names are finally seeing puts galore as even market leaders like GRPN are down 40% today. PLUG is down 45% as well, the market is finally decimating these junk names that have held up for far too long. IP is another in the top bearish trends that’s been down all week since that put buy I noted earlier this week.

1 Week

2 Week