U.S. equities closed higher on Thursday, reversing earlier losses. Financials, Consumer Staples and Utilities led. Communications Services and Health Care lagged. Treasuries were stronger across the curve but well off the low yields of the day. The dollar was weaker on the major crosses. Gold finished up 0.8%. WTI crude settled down 2.2%, off the worst levels of the day.
The Invesco QQQ Trust (QQQ) has a Very Bullish Chaikin Power Gauge ETF Rating and continues to outperform the SPY. The OB / OS Indicator is very close to entering an oversold position and Chaikin Money Flow is bullish. QQQ is above the rising long-term trend line, trading just below record levels. The Power Bar Ratio is bullish at 32 to 10.
S&P futures are down 0.6% and US equities are on track for another down week. Asian markets were mixed overnight. Japan was up nearly 1%, while Hong Kong and South Korea extended their losses. Mainland China will reopen on Monday. European markets are lower. Treasuries are unchanged. The dollar is slightly weaker vs the yen and slightly stronger vs the euro. Gold is down 0.2%. WTI Crude is up 0.2%.
Key Themes and Relationships
High Yield vs. Treasuries
The relationship between high yield bonds (HYG) and intermediate term treasuries (IEF) continues to weaken as investors favor the safety of treasuries. The ratio is below the declining 200-day moving average and is now testing the top end of support. The RSI recently became oversold and we note that it has not become overbought since September 2018, signaling that the moves to the upside have not had much momentum.