Mid-Day Update – 6/17/2021

Bizzare – that is my primary thought here. Let’s start with 10-year US Treasury yields paring back under 1.5%. Clearly, that favors growth and tech. Next, the NASDAQ 100 screamed out of the open straight up to tag a new all-time high before stalling. Next, the S&P 500 went straight to nowhere – stalling right at the overnight high. Financials (XLF), Basic Materials (XLB), and Energy (XLE) are getting clobbered – all down north of -3%. Energy is approaching -5%.

The S&P 500 ran into the supply mentioned this morning. NYSE breadth is nearly 3:1 negative. NYSE Tick distribution has been negative all day. The broad NASDAQ breadth is even.

Honestly, I don’t know what to make of this at all. Is the QQQ and/or NASDAQ 100 a solo artist? A one-hit wonder soon to join the living dead? Or, will it pull everything else back up with it? I would favor the former over the latter. But at this point, I don’t know. I am wondering if any of this has to do with quadruple witching tomorrow? Maybe that is where the term “witching” comes from. Is it another full moon?

I woke up at 4:30 am here, and that is when both indexes were retesting their lows overnight in the futures market. Trading rehab never worked for me. Naturally, I took a dive toward my keyboard. I picked up two contracts on each of the NASDAQ 100 and S&P 500 futures (counting once again on the WEM lows holding through Friday). I woke up to blissful profits, but sold at the 15-minute / 21 EMAs on the cash indexes about an hour after the open. I could not have imagined the NASDAQ 100 would keep going.

All I will say for now is that I would keep my powder dry until the picture is a bit clearer. The divergence here between tech and the rest of the market is not healthy. I need the weekend to figure all this out. I have seen some weird markets and weird times, but this dystopian drama we have all been experiencing seems to get stranger and stranger.

I just picked up two S&P 500 minis off the 4189 WEM low for a trade. Hang in there with me until we can ready, fire, aim again.

A.F. Thornton