Rotation Report: Q2 Macro vs Micro

It's worth keeping in mind how these last two weeks have played out.  In this week's See It Market Linkfest, I noted this sense of calm in the blogosphere.  It's weird.  All quarter there was a prevalent sense of caution in that just kind of disappeared post Fed.

That tied in quite interestingly with this fear that built up on a micro level while the S&P 500 had it's second tightest quarterly range since 1950.  Something's got to give...eventually.  Economically sensitive sectors like the Transports and now Semiconductors have traded poorly while the speculative biotech group trades off sentiment and has blasted to new highs.  We'll see how long this can continue, maybe this is just the theme of the year.

Greece is what it is.  The apathetic sentiment towards it leads one to think the market has some pricing in to do.  We'll have to see if this has some affects on heavily indebted parties, but that'll be down the line.

Moving to the charts...

MACRO

Bounces in treasuries continue to fall short of technical targets, suggesting weakness.  We've got one giant piece of evidence to watch in the treasury market.

The 10 year treasury yield is testing a MAJOR resistance line

Also, High Yield Corporate Bonds are testing  the 200 day moving average.

The NASDAQ to 30 year treasury bonds ratio is testing a major boundary line.  It'd be shocking if stocks outperformed bonds this week.

China via the Shanghai Composite has dropped roughly 20% in less than two weeks as it tests the May low.  Even though we're at a support area, there are no signs of a sustainable low.  This could make for a pretty disgusting outside month.

Is this a topping pattern in the S&P 500 at the major Fibonacci extension level?  Yeah, yeah -  there's never a way to know the future, but that hasn't been necessary with an excellent level to trade against.

Breadth in the S&P 500 continues to deteriorate.  Upside moves still seem quite limited.

Checking in on the NYSE Dashboard we see the Advance-Decline lines still inline with price, but volume notably deteriorating.

Commodities: signs of life

The Ag commodities had a statement week.  It always happens after the market bores us to death and/or squashes all hope.  This kind of reminds me of the current action in the S&P 500 except the opposite (toppy).






Cotton may be completing it's bottoming pattern at this major low.

Oil failed to break below the 50 day MA Friday.

Groups

Consumer Discretionary relative strength is hitting new highs.

Biotech well tell us a lot about the market early in the week.

Regional Banks are a place to fish as the market corrects.

Industrials are testing the 200D MA

Apparel Retail is trading well

 Dana Lyons has noted this key level test in the rails.  Trucking is testing trend support from the 2009 lows once again.

It's looking more and more like the semi deal frenzy marked a climactic top in the group as SOX has started to lag the market and sell-off aggressively. The Rising 200 D MA is only 3% away.

Groups standing out: publishing, steel, restaurant, tourism, water.

Trade 'em well!