The S&P 500 ($INX) consolidated during July after completing a bearish spike reversal during June, the latter confirming a move to a major downtrend. The S&P closed July at 7,489.72, down 9.64 (0.1%) for the month. Theoretical Positions: Investors likely bought back into the Index durning April. Investors could’ve decreased their positions near the June settlement.
The Dow Jones Industrial Average ($DOWI) extended its major uptrend to a high of 53,289.30 during July. And while the Dow flirted with a possible bearish spike reversal, it rallied late to close at 52,485.03, up 165.83 (0.3%) for the month. We will need to keep a close eye on the DJIA as it could turn out to be a case of the Horseshoe Proximity (close is close enough) regarding a bearish spike reversal. Theoretical Positions: Investors are likely long blue chip stocks, but keeping an eye out for a potential bearish technical reversal pattern due to expectation for rate hikes to come.
The Nasdaq ($NASX) extended its major downtrend to a low of 24,425.34 before closing at 25,373.85, down 839.87 (3.2%) for the month. Recall the Nasdaq completed a bearish spike reversal during June. Theoretical Positions: Investors might’ve sold some of their holdings near the June settlement of 26,213.72 based on the completion of a bearish spike reversal pattern.
The US 10-year T-note (ZN): The 10-year T-note extended its major downtrend to a low of 107-315 during July before closing at 108-000, down 1-285 (1.7%) for the month. This was the lowest the 10-year has been since January 2025, meaning yields continue to rise on the expectation of higher rates. Theoretical Positions: Investors may have gone short the 10-year near the March close of 111-015 based on that month’s bearish outside range.
The Fed Fund Futures Forward Curve: It was a volatile end of the month for the Fed fund futures forward curve. Following the announcement of no change in interest rates on Wednesday, July 29, futures contracts abruptly rallied despite a general consensus rates will be going up sooner rather than later. However, at July’s close, the curve pushed back its expectation from the June projection of September hike to October, with another possible in January 2027. This would still fit with the downtrend in US Treasury futures (see 10-year T-note above) and what is still considered an uptrend in the US dollar index (see Currencies).
