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Stocks Extend Losses, Break Below Key Technical Support

Tyler Durden's Photo
by Tyler Durden
Friday, Dec 03, 2021 - 10:55 AM

Update (1100ET): US equity market dip-buyers are notably absent and Nasdaq And Small Caps are now down 2% on the day (after being up 0.5% before the 'good news' hit)...

This has pushed the majors below key technical support once again. S&P < 50DMA, Nasdaq <100DMA, and Dow <200DMA (Small Caps are already well below the 200DMA)...

As SpotGamma notes, things start to get a little more exciting if the S&P drops to 4500 as Gamma flips...

And we are getting close...

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Plunging unemployment and record high ISM Services... what is their to complain about?

Sadly - for equity investors - a lot! This 'good news' is very definitely 'bad news' for the only thing that levitates stocks - Fed liquidity - as it offers yet more cover for an accelerate taper and earlier and more aggressive rate-hike trajectory.

STIRs are pricing in an increasingly hawkish Fed...

And stocks don't like that...

It appears - just like in Dec 2018 - stocks are in search of the new strike price for Powell's Put (stocks fell 20% before Powell flip-flopped and sent the yield curve soaring again)...

Meanwhile, the yield curve has ripped back to flatter on the day...

As a Fed policy mistake is also priced in.

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