As we pointed out in last week's Desk Note and previous Tactical Positioning notes, several key assets were pressing major resistance. If they failed to break through, we were likely at the onset of the next leg lower. We are now starting to see those failures across Korean equities, semis, and U.S. equities.
First came the infamous KOSPI, which reversed lower from 7.1K resistance. SPX7745.06 spent almost two weeks grinding along its ascending resistance line, while ES1!7724 compressed inside its wedge. That setup has now resolved lower. ES broke below the wedge yesterday and has accelerated to the downside since.
SOXX542.2974 was rejected again at 561 resistance. Given the overnight action in NQ, it is unlikely to open above that level today. NQ continued to display relative strength through yesterday. Overnight, NQ is finally leading lower. This is the PA bears have been waiting for.
The most interesting move came from long-end yields and gold. US30Y5.326 reached its highest level since 2007 yesterday, while US10Y4.74 printed a new YTD high overnight. Gold pushed higher alongside both.
As I have mentioned previously, the inverse relationship between long-end yields and gold may be starting to break down. However, despite repeated attempts, gold remains below both its ascending resistance line and horizontal resistance. Until both break, there is no confirmation. Patience is warranted.