It is never a good sign when former market leaders start to sell off. Profit-taking in PLTR, NVDA, and other members of the Magnificent 7 has led to Nasdaq underperformance versus the Dow. This is a clear warning signal, as capital rotates into defensive sectors.
The S&P 500 closed below the 6450 Buy-Zone, which now turns into resistance. After recalibrating Monday’s signals, the uncertainty level of the SP500 Indicator declined—unfortunately revealing that the detected impulse was false. This is inconvenient but unavoidable, as not all necessary data is available at the time of calculation. This is precisely why the Indicator always publishes both the signal and its uncertainty.
While the NQ has already closed below the Daily MA20, the ES is about to test this critical support today. Price action should be monitored carefully. The weekly SP500 Indicator has been flashing weakness for several weeks, suggesting that this trend may now be unfolding into deeper pullbacks—or into heightened “choppiness,” as several key events are scheduled in the coming days.
Today’s Key Events
20-Year U.S. Treasury Auction (19:00 CEST) The long-bond auction will test investor appetite for duration at a time when yields remain elevated. Strong demand would signal confidence in disinflation and safe-haven demand, while weak demand could push yields higher and steepen the curve.
FOMC Meeting Minutes (20:00 CEST) The July minutes will provide insights into the Fed’s internal debate, especially after two members dissented in favor of rate cuts. Investors will look for language confirming whether the Committee is leaning toward a September cut or maintaining a more cautious stance. Rate-cut expectations for September have already eased from above 90% to 85% after last week’s hot PPI release.
Expected Market Impact
Bonds: A strong auction could support Treasuries and push yields lower. Weak demand, however, would likely pressure long-end yields higher and weigh on risk assets.
Equities: If the minutes confirm a stronger consensus toward cuts, equities should benefit, particularly rate-sensitive sectors. A more cautious tone, stressing inflation risks, could cause equities to retrace.
USD & Commodities: A dovish message could weaken the dollar and support gold and commodities. A hawkish surprise, combined with a weak auction, may lift the dollar and weigh on sentiment.
What to Expect Today
Today’s session is set to be dominated by bond market dynamics and Fed communication. Any weakness in the auction could immediately pressure equities, especially growth stocks that already look fragile after recent profit-taking. If the FOMC Minutes show a growing willingness to cut rates, risk assets may recover later in the day. But if the tone remains cautious, volatility will likely persist, keeping markets choppy into the week’s heavy data flow.