A Big Week For Markets

It is a big week, with the CPI report on Thursday and a bunch of government bond auctions later this week. That means rates will be on the move, and word that the China zero covid policy will remain in place, and the dollar too.

Stocks got a bid on Friday following a slightly hotter-than-expected jobs report. The stock rally came on dollar weakness as the Chinese yuan rallied. That rally seems to have now been pre-mature, meaning the dollar will likely return to its strengthening ways.

USD/CNH Daily Chart

The yuan was trading around 7.32 when it closed on Thursday, and rumors that China would lift its covid policy strengthened the yuan versus the dollar, sending it to 7.17. But now that the government has said that the policy will not be removed, the dollar is likely to strengthen, and then the yuan is likely to move back to around 7.32.

Dollar vs. S&P 500

The dollar index and the S&P 500 futures have been trading inversely to one another for some time, and should the dollar begin to strengthen again, the market gains from Friday should melt, and the S&P 500 should continue on a path lower.

S&P 500 Futures Hourly Chart

Rates

On top of that, this week, we will be getting a 3-year, 10-year, and 30-year auction, along with a CPI report on Thursday, which could come in hotter than expected. The bond market will also be closed on Friday for Veterans day, but stocks will be left open. The 10-year appears to have broken out of another bull flag, and a simple projection suggests the 10-year can rise to around 4.72%. Given the path of the 2-year, which is probably on its way to about 5%, a 10-year around 4.7% doesn’t seem all that improbable.

US 10-Yr Govt Bond Yields Daily Chart

TIP ETF

A rising 10-year rate should also help drag real yields higher, ultimately resulting in the TIP ETF moving lower. The ETF moves inverse to yield, and when real yields rise, it indicates that the ETF should move lower. The TIP ETF consolidation has occurred since the end of September. That consolidation is the only reason we have stock prices hanging in. Once the TIP ETF starts making lower lows again, it will drag stock prices lower. Once again, the TIP is very close to breaking down; the only question is if it will happen this week.

TIP ETF Daily Chart

Nasdaq

The QQQ is already flirting with its lows and isn’t that far off from making a new one. A move lower in the TIP ETF would push the QQQ to new lows.

QQQ Hourly Chart

ARKK ETF

What is also back to its lows is the ARKK ETF, and like the QQQ, it is very close to breaking toward a new low as well. There is a clear downtrend, and the RSI negative sloping suggests downward momentum.

ARKK ETF Hourly Chart

Tesla

Tesla (NASDAQ:TSLA) is again back in the $205 zone, and the RSI is trending lower. Furthermore, we have been watching support at Tesla hold repeatedly, but at some point is bound to break, and with momentum this bearish, it could happen this time around. A break of support sends the shares lower to about $180.

Tesla Daily Chart

DocuSign

I think it was last week that I noted that DocuSign (NASDAQ:DOCU) was close to breaking out of a bear flag and that it did on November 2. Support is close to around $38.

DocuSign Daily Chart

Intel

Intel (NASDAQ:INTC) is showing signs of life after a horrible decline. The RSI has finally turned higher, and the stock has reversed its downward trend. It still has much to prove and needs to clear resistance at $29.50. But it looks better than it has looked over the past few years.

Intel Daily Chart

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