On Monday, Fairlead Strategies released an analysis indicating that the S&P 500 (SPX) is currently experiencing a consolidation phase.
This pattern comes as a result of a recent decrease in short-term upward momentum. Despite the overall market's slowdown, the strength observed in mega-cap stocks—with the notable exception of NVIDIA (NASDAQ:NVDA)—has helped maintain some level of market support.
The analysis suggests that the major indices are expected to remain attractive to investors through the end of the year. However, there is an anticipation of a market correction that could occur early in the following year.
In the bond market, the 10-year Treasury yields are currently testing a critical resistance zone between 4.36% and 4.37%. This resistance is defined by a combination of a downtrend line and the weekly cloud, which is a technical analysis indicator.
The upcoming Federal Reserve announcement later this week is seen as a pivotal event for the yields. Should the 10-year Treasury yields close the week above the resistance level, it would signify a breakout, thus reversing the cyclical downward trend within a longer-term uptrend.
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