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Happy Taco Tuesday Traderade family! It seems that the bear market rally may be faltering here, and as a result I'd like to share two areas of the market that seem rather weak and are worth watching for further downside.
Market overview
First let's take a look at some intermarket dynamics that suggest downside is likely, particularly in longer duration growth factor risk assets, like NASDAQ stocks, and particularly those that don't make money.
The relationship between QQQ (black) and TLT (red) once again suggests that there's room to 'catch down' as rates are on the rise and the 30-year bond price action of late seems to suggest that there is the increasing potential for further downside, which would also mean it's likely that rates head higher.
Short covering seems to have run its course
Tech stocks have seen aggressive short covering, the likes of which we haven't seen since early 2021, when the last speculative bubble in unprofitable growth and tech burst rather unceremoniously, leading many stocks to fall 60, 70, 80, even 90% from their all-time highs to the ultimate troughs reached last year. But this short covering, like the frenzied buying, seems to be closer to an end than a beginning having reached such extremes.
For more on other areas we're watching that suggest the bear market rally is closer to an end, check out this video.
ARKK
Cathie Wood's ARKK seems to be springing a liquidity leak again.