Stocks finished flat on Monday, which was unexpected, and followed the recent 4-day rally pattern nicely, which led to a period of sideways consolidation of about the same length.
S&P 500
The S&P 500 finished flat and was saved by a decent market on close buy imbalance, which helped propel the index higher in the final 10 minutes of trading. But the more important underlying story was that the gap at 4,480 was filled and, for the moment, rejected. That’s important to note.
2s
Powell was the driving force for markets as he reiterated his stance on monetary policy at a Q&A session and indicated that hikes of more than 50 bps were possible. It was also more than evident that inflation comes before economic growth. It sent yields soaring across the curve, more specifically at the front of the curve. The 2yr rate rose to around 2.12% and was within striking distance of the 2.2% level we have focused on.
5s and 10s
Additionally, the 10-year and 5-year spread was negative at -0.03%.
20+ Yr Treasury ETF
The iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) had a bad day, making it the lowest close since the summer of 2019. At this point, the odds for a drop back to $125 seemed like they had increased.
ARK Innovation ETF
Meanwhile, the market was back to selling the ARK Innovation ETF (NYSE:ARKK) yesterday, which finished down 2.8% on the day. I like to watch the ARKK ETF because it seems to lead the rest of the market, at least in my observation. I have noticed that once the ETF starts to get dumped, it can act as a leading indicator for the rest of the market. In the meantime, it was trading around the downtrend at $63.50.
