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Inside Markets — Trend Continuation

Trend Continuation

May 8, 2024

A catalyst vacuum until next Tuesday/Wednesday should mean trend continuation (biased higher) for the SPX, but the index will likely struggle on the advance to strong overhead resistance at 5254 (~1.45% above current levels).  A break above 5254 likely requires lower yields given lingering concerns about inflation. Next Tuesday’s April PPI report and Wednesday’s CPI print will help inform markets on the direction of bond yields and equity markets.  The SPX will have an easier time advancing if/when 10-year yields close below 4.46% and extend beyond 5254 if/when yields signal an obvious change in trend below 4.29%.  Note, the unfavorable supply/demand dynamic in bonds will make it more difficult to achieve lower yields.

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