US STOCKS: S&P - Trades Heavy As Headwinds Mount At The Highs

The S&P(ESM6) range overnight  was 7389.75 - 7476.75, SPX closed +0.30%, Asia is currently trading around 7415, -0.30%. The S&P(ESM6) continues to trade a little heavy after a very limited bounce yesterday. The headwinds are mounting for a market that looks to be a little over its skis at the moment. The NFP seems to be the straw that broke the camels back with US bond yields(US 30-Year 5.045%) turning higher again as the market begins to price in a rate hike. Concerns over how much liquidity the SpaceX IPO will withdraw from the market is also weighing. The Risk-Parity Index continues to be a red flag showing some bearish divergence with the S&P, it was unable to make new highs as US equities surged to new all-time highs(Fig.1). This morning US futures opened a little lower, but have since pared back most of those early losses, E-minis(S&P) -0.05%, NQZ5 -0.05%. On the day, I continue to err on the side of caution up here with the market looking a little stretched short-term and what looks to be a potential top in place. Resistance is back toward the 7480-7520 area where the bears could look to fade a bounce looking for a test of the 7300-7350 support(Fig.2). A break below here is needed to potentially signal a deeper pullback toward the 7000-7100 support area.

• Daily Chartbook on X: “"Fed speak has become more hawkish recently, especially in the minutes. Markets are now pencilling in one Fed hike as early as Q1 next year. - @Daniel_VonAhlen @TS_Lombard.” 
• “SpaceX’s IPO is well oversubscribed, according to people familiar, as demand builds before orders close Wednesday.” - BBG
• The S&P 500 Index Average True Range(ATR) for the last 10 Trading days:  88 Points

Fig 1: Risk-Parity Index Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

Fig 1: S&P 500 Index Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P