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All Eyes On Yields: The Treasury market continues to be under hyper-focus as many take their cues from the "smarter" market. As many take their clues from the 10-year, which is extended from its rising 50-day SMA as it has been all year and on a current 7-week winning streak, below I take a look at the 20-year via the TLT. The vehicle is at an inflection point here which must hold this area or a likely magnetic push toward the very round par number, most likely resulting in further equity weakness. PRICE is omnipotent but candles can help guide and a bullish counterattack candle from 9/13 in strong volume. Friday recorded a doji which further strengthens the potential "bottoming" case as they are adept at sniffing out possible trend changes from the prevailing direction. Of course, they are not foolproof as for the second consecutive Friday a doji candle was recorded with the 9/9 session one too (bullish harami cross as well). Next week feels very important for the markets and the S&P 500 must quickly reclaim that 3900 level or the pain can just be getting started. The theme in this note is to be patient and wait for strength to resume before investing on the long side with confidence. How long that will take no one knows.

Tech Must Participate: This past week was a well-received one with all 11 major S&P sectors gaining ground. The consumer discretionary space was the best actor with the XLY higher by more than 5%, and energy was in the cellar up .8%. Bulls want to see that type of "breadth" if this move off the June lows will continue to go anywhere. Over the last one-month period technology via the XLK is dead last of the 11 groups with the XLK off nearly 5% (on a YTD basis it is lower by more than 20% and 10th best of 11). Pick your bias. If you are bearish the obvious weakness is your narrative, if you are a bull you feel there is plenty of runway to go into year-end if the space can catch some love. The nascent financial strength is to be admired, but if this market move off 11500 for the Nasdaq and 3900 for the S&P 500 is too have legs technology must participate. The chart below of AAPL will have a major influence on that premise. On a WEEKLY basis, the round 180 number has been a roadblock since last December with no CLOSES above the figure. This past week recorded a bullish WEEKLY hammer candle and the intraweek low of 152.68 should be considered a clear line in the sand for the bullish thesis.

Behemoths Fatiguing: The XLY on a YTD basis continues to lag besting just the communication services group lower by 24%, the 10th "strongest" actor out of 11. The top-heavy ETF is adversely affected by its two largest components, both of which recorded stock splits in the last few months and we know stocks tend to lag after these. TSLA flirted with breaking above a bull flag pivot of 315 (split adjusted) but was never able to break above it and it is now 34% off highs made last November near the very round 400 number. The chart below of AMZN has now given back more than half of the impressive 4 weeks winning streak the weeks ending between 7/22-8/12 that rose by a combined 24% the last 3 weeks. This name is also one-third off its annual highs and if one is playing this name on the long side using a stop of 123 as always on a CLOSING basis. The XLY is now lower 10 of last 14 sessions and give Tuesday some credit for holding last Thursday's low, but below that level, all bets are off.

Monthly Nasdaq Candle: Coming into the month of August I looked at a MONTHLY candle on the Nasdaq and was inspired by what I saw. The chart below shows the last 2 times it touched its rising 50-day SMA in early 2019 and 2020 and the following month recorded a bullish candle it was up and off to the races. Instead August concluded with a bearish shooting star that was rejected near the very round 13000 number. It has still not broken the 50-day and it is normal to cut back into a bullish candle so there is some time but the propulsion that the previous 2 times is not there now. There could be a bearish RSI trend change with the rejection at 50 and now a move back lower (notice since 2014 it was repeatedly above 80 number), a level of former support. Last week the semis slumped almost 7% and software slipped as the IGV fell nearly 5%. Names like OKTA MDB and GTLB all cratered between 25-30% for the week and often the best loss is the first loss and move on. The only thing that may be positive at the moment is the absence of bulls. But PRICE action is omnipotent and that is painting a clear and bearish picture.

When Wisdom Speaks: The book below is a must-read in my opinion, and it speaks to investor psychology of being frightened to buy stocks on the way down in a fierce drawdown. But can the quote be viewed as instrumental on the upside as well? I seem to be in the minority after Friday's action and the chorus of a near-term top being in has grown deafening. The negativity is pervasive. As 13Fs were filed recently the media made a big deal of Michael Burry holding almost zero stocks. JPM Kolanovic said this week to dump stocks and buy commodities. Then a Zerohedge article came out today saying the squeeze is over as new shorts have come back to life. I will focus on growth as that has been the driver since the June low and yes the QQQ did record a doji candle this Tuesday (also a bearish harami cross, but the breadth thrusts we have witnessed were still recorded. My feeling is that the 21-day EMA needs to hold about 1% lower from Friday's CLOSING PRICE (if not a retest of the 314 area on the break above an ascending triangle may come into play). Then the growth spurt can spread its wings again. When that time comes will investors want to buy, or will they be too scared waiting for the big pullback and not want to?