The theme for the week has been a move lower early and midweek followed by the market firming up on Thursday and maybe some follow-through higher Friday morning. Overall, the theme played out with the caveat that it was weaker than expected into Thursday morning. My goal for today was to get SPX up into the 4534 to 4543 range and that has taken place. Now, I’m not sure what the market has in store for us. I can live with either scenario, this bounce being a fourth wave, or relatively early in a move that will fill the overhead gap and retest of the high from late last month.
I think the bond market may be making a major low relatively soon and get a bid on future equity weakness. In other words, I think the inverse relationship between bond prices and equity prices returns. Also, I expect any equity weakness only drives USD higher as it climbs out of the hole.
Pretty sharp intraday bounce in bonds today. I’m starting to worry about truncation as an option here.