Nasdaq Outperforms for a Sixth Straight Week as Bond Yields Hit 2002 Highs: Key SPX and NDX Levels

Tech Carries the Market as Yields Surge to Levels Not Seen Since 2002

Strong performance from technology stocks lifted the Nasdaq to a fractional weekly gain, and the index outperformed the other major U.S. indexes for the sixth week in a row. The S&P 500 ended fractionally lower for the week.

The U.S. stock market closed out the third quarter with mixed September results. Gains from many of the biggest technology stocks helped the Nasdaq outperform, with the index rising 1.9% while the S&P 500 fell 0.5%.

The week produced another volatile performance for bond investors, as yields of some government bonds briefly touched their highest levels since 2002 before modestly retreating. Shorter duration yields finished the week broadly flat, with the 2-year Treasury ending at 4.84%. Longer duration yields rose, with the 10-year Treasury at 5.28% and the 30-year at 5.63%.

Mortgage Rates Post Biggest Weekly Jump in Four Years

Amid elevated bond yields, the average 30-year mortgage rate posted its largest weekly increase in four years, jumping to 7.28% from 7.03% the previous week.

Following Friday’s worse-than-expected jobs report, bond trading reflected investor expectations that the Federal Reserve is likely to hold its benchmark rate unchanged at its October 28th meeting rather than lifting it for the second meeting in a row. Trading in rate futures markets implied a roughly 79% probability that the Fed would hold steady, versus a 21% probability of a quarter-point hike, according to CME FedWatch. A week before the jobs report, trading implied a 64% probability of a rate hike.

My Technical Read: Key Resistance Still Has Not Been Cleared

Despite the S&P 500 snapping back Thursday and Friday, it still has not punched through key overhead resistance in the 7,780-7,815 zone. Clearing that convincingly at a minimum would be necessary before we could see a run at 8,000. Chart support now sits near 7,615, 7,500, and 7,313.

On the Nasdaq 100, resistance is near 31,000-31,015, with 33,000 potentially coming into play above that. Support appears near 29,935 and 29,370. Below that, key support sits at 28,900.

In any case, as we always do at TheTechTrader.com, we’ll “Trade What We See, Not What We Think.”

— HARRY BOXER, THE TECHNICAL TRADER | www.thetechtrader.com