Update: S&P 500, Junk Bonds, KRE, AMD, SMCI, etc.

Some very nasty price action today and some concerning developments when you delve through the action. There certainly feels like some sort of liquidation breaks under the surface today. 

The market opened pretty strong, pushing through yesterday’s high of day, then flat-out broke down. Our Lean of “selling the 30 to 40 point rallies” has been tough given that the rallies have been complete rubbish thus far!

In any regard, let’s get a quick look at the S&P 500 and a few open positions, because we need to be careful if there’s about to be a real change in tune here. 

S&P 500

This morning we pointed out the contrasting strength in semis with the weakness in banks. KRE and the XLF are pointing to a real issue here in regards to price action.

As it relates to the S&P 500, we opened the week above last week’s high, failed to sustain above that level and are now probing below last week’s lows. That has a bearish engulfing candle in play on the weekly and would set up quite a bearish tone. 

The one caveat?

Tomorrow’s jobs report. 

Reported at 8:30 am ET, a weaker jobs report could take the “higher for longer” rate talk down a notch and at least give us some reprieve. A strong report and the S&P could get another beating. 

The Chart: Does that set the stage for ~3850, which is the 50% retracement from the 2023 high back down to the Dec. low? There’s a solid argument that that could be the case. 

At this point, the bulls desperately want to see a close back above last week’s low — both today and by the end of the week. 

Bigger picture, the action tomorrow could set the stage for quite a bit of developments in the stock market. 

KRE

Not sure what’s going on in the world of regional banks, but this raises a huge Dan-and-Eugene-Levy eyebrow. 

So does the action in junk bonds, via the HYG and JNK: 

Open Positions 

1. AMD — “Can now raise our stop-loss to a much more comfortable B/E. $86 and $88 are the next upside trim spots.”

1. Got $86, but not $88. Honor that stop if we see it. No coughing up good profits. 

2. SMCI — “Daily up over ~$100. $94 Stop. $104 to $105 target (just shy of this yesterday!)”

2. $104+ hit today, that’s profit-taking for us. Now B/E Stop.

Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.

Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!