Katie Stockton: Use Relief Rallies to Reduce Exposure, Focus on Technicals

Market Volatility and Technical Analysis

• 💡 Technical analysis is crucial for navigating market volatility by removing emotion and focusing on indicators.
• 🎯 Key levels provide guidance for risk and reward potential during market rallies.
• ⚠️ Market internals like breadth and sentiment can be short-term indicators but may signal extremes even within bare market cycles.

S&P 500 Outlook and Downside Risk

• 📉 The S&P 500 has broken below support levels, with a key watch level around 5126 to 5133.
• ⚠️ A decisive breakdown, marked by two weekly closes below resistance, could target 4500, representing a 14-15% drop.
• ⚡ The current relief rally is expected to continue near-term but ultimately fail, potentially leading to a lower low.
• 📌 Investors are advised to use the relief rally to reduce exposure.

Identifying a Bare Market Cycle

• 📊 Long-term gauges like the monthly MACD indicator show widespread sell signals, suggesting an early stage of a down cycle.
• ⏳ The secular bull trend is still intact but may not resume until later this year or sometime in 2026.

Gold and Bitcoin Divergence

• 🔗 Bitcoin is currently behaving as a risk asset, showing high correlations with the NASDAQ 100.
• 🌟 Gold has shown positive momentum and has been a primary place for capital to be parked.
• 📈 Gold's 20-day moving average has been trending higher all year, indicating strong momentum, but a rollover could signal a loss of momentum.

10-Year Treasury Yields

• 📊 The 10-year Treasury yield shows neutrality from a technical perspective, with a range upper boundary around 4.74.
• ⚠️ While a test of the upper boundary is possible, there's no immediate indication of a significant breakout in yields.