We can however see that the selling involves a smaller number of stocks as the NHNL indicator is making a higher low.
We can also see below that the 20DMF displays a positive divergence.
As a matter of fact, the NQ8 and most of the tech sectors also display some relative strength.
The S&P500 Futures indicate that large players are not selling here.
All in all, this points to either a price bounce or monthly options manipulation on a grand scale.
However, the big picture is still inflation and interest rates.
We can see below that the 10Y rates continue to push higher, in anticipation of the next Fed hike.
Treasuries are hence being sold,
but money is not going into US equities, but preferably into corporate bonds as the rates differential bellow tells us.
As a consequence, the equities markets look slightly less expensive here in terms of yields comparison and might indeed bounce back up.
Conclusions:
Yesterday, when I detected the positive divergences shown above, I closed the few short positions that I had opened in strength three days ago.
Not sure that it is now time to turn long again here as options expiration is always tricky to trade.
I still expect some weakness ahead of the FOMC announcement, followed by a relief rally... But clearly I am not betting money on the short side here.
