Regional Fed manufacturing indexes are still positive but weaker. This chart from Doug Short shows the trend (the emboldened black line is the average):
The latest Empire State report had a decline in new orders, employment, and the total workweek. The Philly Fed's index's current and future expectations were lower; the diffusion index (which measures the number of up and down indicators) was barely positive. The Richmond Fed's overall reading was up 2 points to 5; inventories were increasing and lead times were decreasing, indicating a higher level of slack in the system.
The latest Dallas manufacturing Index has a number of anecdotal comments showing tariffs hurting (emphasis added):
The Dallas Fed's district comprises the entire U.S.-Mexico border, so this report is catching all the negative news associated with the latest U.S.-Mexico tariff spat.
Liz Ann Sonders - the Chief Investment Strategist with Charles Schwab (NYSE:SCHW) - has one of the most interesting and useful Twitter feeds. Two recent tweets highlight key developments that haven't caught as much interest as they should:
The market is betting on a very steep set of rate cuts, which means the bond market sees a lot more weakness than implied by the headline economic numbers.
This correlates with the weak readings in the Transport Index during the Spring rally.
Let's turn to today's performance table:
Another bearish day. The long-end of the curve had a modest rally. Small-caps were down modestly while the large-cap indexes had the largest declines.
The daily charts show that the indexes are starting to break-down across the size spectrum. Let's start with the micro-caps:
This index has yet to move through its 200-day EMA. Over the last few days, it's fallen through the shorter EMAs (which are still below the 200-day EMA) and its short-term trend line.
The (NYSE:IWM) was briefly above the 200-day EMA but has since fallen through the technical landmark. It hasn't moved above it's early May high. Prices are also below the short-term EMAs while breaking a short-term trend line yesterday.
The mid-caps have yet to move above the highs from early May. Prices broke the short-term trend line yesterday.
The QQQ (NASDAQ:QQQ) has yet to move above the the high from early May. Prices broke the short-term trend line earlier yesterday and are now moving lower. They remain above the short-term EMAs.
The SPY (NYSE:SPY) hit the previous high but stalled. Prices have now fallen through the 292 area and are heading lower.
Overall, the markets are now engaging in what I refer to as a "slow-motion roll-over." Prices have hit highs and are now slowly starting to sell off. It's doubtful we'll see a wave of panic selling; traders are convinced that the Fed is on their side. But, it certainly looks like the markets are in a selling mood.
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