Stocks could be ready to rally. However, wishful thinking about rate moves has gotten investors in trouble by buying into what turned out to be short-term up trends a few times this year. Fed chair Jerome Powell insists he's nowhere near a pivot. Of late investors seem to be taking him at his word. But the Fed can't continue to ignore housing market collapse, U.S. growth slowdown, US Dollar appreciation causing pain to key U.S. allies, and a potentially calamitous international bond market. Then in thirty days are the US mid-term elections. We may be getting close to where the Fed blinks.
Equities The US and Europe markets rallied about 2.5% today, nevertheless, their long-term downtrends continue. US markets rose after making double long-term bottoms.
The markets have declined over 25% in the past three quarters. We may be getting close to where the Fed blinks. The Volatility Index VIX dropped 4.8%.
For last five days, Gold miners rose 14.5%, Energy +10.7%, Material +4.3%; Staples fell 2.25%, Consumer Discretionary -2.4% and Utilities -3.71%.
Fixed Income The 10-year. US Treasury Yield fell 4.02% today, closing at 3.651% and down from Sept 27 high of 3.992%. The 2-year US Treasury Yield fell 2.37% today, closing at 4.12% and down from recent high of 4.30%. The 2-yr yield's rise is parabolic.
The 10-2 year Yield curve remains inverted; spread decreased slightly to -.45.
Currencies Currencies vs. US Dollar: The Australian Dollar, the British Pound, the Japanese Yen and the Euro pulled back from oversold conditions but remain in Bearish trends vs. US Dollar.
The bullish US Dollar, which was overbought, pulled back to close at 111.66 down from last week's high of 114.75. Its remains in a long-term uptrend.
Gold bounced up from level last seen March, 2020 and remains in a Bearish trend. Base Metals, Copper and West Texas Oil remain Bearish.
Market breadth indicators improved, providing some optimism further improvement may be expected. VIX has fallen but is still evaluated at 30.10.