April housing starts fell by 30.2%, the biggest single-month drop since records were first kept in 1959. Single-family fell 25.4% while multifamily fell by a stunning 40.5%.

Futures, which are holding their breakout status after backtesting the SMA100 overnight, ignored the results.

continued for members…

For now, ES is simply working to hold the dashed red TL breakout and the .618 Fib at 2930.This leaves the uptrend technically intact, but at a very lackadaisical pace.

The rising white channel is still intact.Yesterday’s spike higher enabled ES to avoid a bearish 10/20 cross – a net positive for equities.

The SPX version:

VIX is prepared to break down again if necessary…with the momentary breakout of the falling wedge forgotten. COMP made a higher high, suggesting that the recent .786 tag was not a cycle high.

While DJIA has done roughly the same, pushing back above the 2.24.

The NKD, however, indicates stocks have reached a top…or will very soon.  The purple channel backtest, the yellow TL backtest and the SMA100 are all gathered at about 20900.

And the bond market continues to suggest equity weakness ahead.  The 10Y is breaking out – extending the flag pattern a little further… But, the 2Y hasn’t kept pace.

This puts the 2s10s slightly further into bearish territory – higher than all the former peaks except Mar 19.

Currencies are still in limbo, with USDJPY’s breakout finally picking up speed.

DXY and EURUSD continue to waffle back and forth – not really tradeable at the moment but some big moves on the way.

This is the sort of move that usually pops up when nothing else is working very well. Indeed, VIX has already tagged important support and CL/RB have reached potentially important resistance.

With interest rates edging higher, this is a problem. Even a hint of higher MoM inflation would push interest rates higher, and right now that would be a very inconvenient development. It’s a theme to which investors are paying more attention as Home Depot and Walmart both reported nearly $1 billion in coronavirus-related labor expenses.

There are a couple of stocks I’ve been following a little closer than usual lately. As we discussed last week, AAPL’s little red channel broke down. It is now backtesting it after failing to push through the .886 at 314.71. This is quite bearish if the backtest fails.

Another interesting case is DB. Recall that it recently tagged its purple 1.618 at 5.16 after the huge white channel broke down.

Since that test, it has been constructing the rising white channel shown below, reversing on Apr 29 after backtesting the SMA200 and a TL from August.  It’s currently testing a TL that connects the Feb 14 and Apr 29 highs – setting up either a painful reversal or a breakout.

I don’t have a strong feeling one way or the other, but as DB is an important element of the euro zone’s success (or demise) it’s definitely worth watching.

I have a doctor’s appointment that will keep me out of the office till about 12:30 or 1:00. I don’t expect much in the way of fireworks during Mnuchin and Powell’s congressional testimony, but it should be entertaining.

More later…

UPDATE:  2:33 PM

It’s another one of those days…a violent spike up through resistance followed by a defensive stance that would impress the ’76 Steelers.

If VIX would just dump down to the SMA200 SPX could get on with its own SMA200 tag. But, as simple as it would be, that’s not happening.  This tells me TPTB are happy with the trading range we’re in and are simply biding their time, hanging out fairly high so the next horrid headline to come along doesn’t do too much net damage.

UPDATE:  3:40 PM

An almost exact backtest on SPX’s .618 and ES’ red TL.  This is very precise engineering and offers no solid clues as to next steps.  No smoking gun, really.

I’m still bearish, but cautiously so. I think the Moderna news probably pushed SPX up higher than expected yesterday, and now the folks pulling the levers are thinking “hey, why not hold these levels?”  With lots of crummy economic data coming up, though, I think we’ll get more downside. Even AAPL has been very careful to hold its .886.