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Stock Market Moves Lower on Strong Dollar and Higher Yields

Posted 05/15/2018 11:48AM CT | Greg Perlin

Today, the stock market move lower is led by two factors.  One being, a big earnings miss by Home Depot and the other which I have been talking about for a while is the big push up in rates.  Today we have seen the 10-year note push as high as 3.06 which are levels we have not seen in a very long time.   As I have said previously, the economy may have difficulties getting support when yields are above 3%.   Currently, the S&P is down $22 at 2708.50, falling below the 100-day moving average at 2710.  Also adding to the bearishness that we are seeing in the stock market is a continuing rally in the US dollar and hawkish comments out of Fed speakers who are signaling a possibility of four rate hikes this year.  That may be pushing the envelope a bit, but we will have to see if we continue to get good news out the economy.  I believe we will continue to get good economic news, but traders should be cognizant of political tensions that are heating up in the Middle East where earlier this week we saw Israel and the Palestinians exchange rockets attacks.  Technically, the market looks weak at the present with the market falling below the 100-day moving average.  I see support in the S&P at 2679 and resistance at 2728.   My advice is to look to sell rallies with a potential test of further support near 2679.

E-mini S&P 500 Jun ’18 Daily Chart

E-mini S&P 500 Jun '18 Daily Chart

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Greg Perlin

Senior Market Strategist
Greg is a former Chicago Board of Trade member. He was an independent floor trader, pit broker and floor broker with Cantor Fitzgerald. Some of his clients included traders from Morgan Stanley and Lehman Brothers. He also acted in the capacity of desk manager for the morning trade desk. Greg was part of the elite Lind Plus Division for 10 years before joining RJO Futures in 2011.
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