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A Big Inflection Point in QQQ Nears; Bond Yields Test Top of Key Trading Range

If your gut is telling you that something big is brewing in the markets, don’t ignore it.The relationship between interest rates and stocks is about to…



If your gut is telling you that something big is brewing in the markets, don't ignore it.

The relationship between interest rates and stocks is about to be tested, perhaps in a big way. Observe the tightening of the volatility bands (Bollinger Bands) around the New York Stock Exchange Advance Decline line (NYAD) and the major indexes. This type of technical development reliably predicts big moves.

Now that CPI and PPI are out of the way, investors are fretting about the Fed meeting on September 19-20. The fear, of course, is that the potential reacceleration of inflation, as implied by a reviving of the CPI and PPI numbers, will lead the central bank to raise interest rates again.

The outcome of the meeting is anyone's guess. The European Central Bank recently raised rates, but hinted that it may be done with its hiking cycle. China's central bank seems to be at the start of a new lower rate cycle in order to boost its economy. The real arbiter may be the U.S. Treasury bond market. And the place where a lot of the action may take place once bonds decide what to do next may be the large-cap tech stocks. Think QQQ.

First, let's look at bonds.

Are Bond Yields About to Make a Big Move Up?

Bond yields are on the verge of breaking above long-term resistance. Such a move, if it happens, would likely be meaningful for all markets; stocks, commodities, and currencies.

On the one hand, the most recent CPI and PPI numbers suggest inflation may be reviving. On the other, the anecdotal data, such as the Fed's Beige book, ISM, and PMI data, paint a picture of a sluggish economy, or at least one that is not growing too rapidly. Recent data from the University of Michigan reports declining inflationary expectations from the public. Other data points vary widely on a monthly basis. The Wall Street consensus view is that we have stagflation, the combination of a stalling economy and simultaneously rising inflation.

Bonds hate inflation. But the response of bond yields to the most recent inflation numbers was not particularly scary. This suggests that at least some traders are starting to wonder if the odds of a stalling economy aren't higher than those of one with runaway inflation.

A long-term examination of the value of TNX offers a glimpse into the importance of the moment. The reference point is the recent high in the U.S. Ten Year Note yield (TNX) of 4.37%, reached on 8/23/23. The previous high was 4.28%, reached on 10/22.

As of 9/15/23, despite signs that inflation may be rekindling, bond yields have not broken above the 10/22 highs. When this trading range is decided, up or down, the ramifications for the stock market will range far and wide.

QQQ is Poised for a Big Move

A natural place to look for big moves in response to interest rate trends is the interest-rate sensitive areas of the market. This includes homebuilders, real estate investment trusts (REITS), and utilities. I cover real estate, and housing in detail here.

Yet an often overlooked area which is quite sensitive to interest rates is the large-cap technology sector. Large-cap stocks matter because popular and heavily weighted S&P 500 (SPX) and Nasdaq Composite index (COMPQ) stocks, such as AAPL, MSFT, NVDA, and TSLA, are also housed in the Invesco QQQ Trust (QQQ). Given the widely held status of these stocks, when QQQ moves, the market pays attention.

Here is what's important. First, QQQ is currently testing the important $370 price support area. If the ETF breaks below $370, it could fall to the $360 area, or even to $350. $370 is important because it is both where the 20-day moving average and a very large Volume by Price bar (VBP) reside.

VBP bars indicate price areas where bulls and bears are fighting for dominance of the trend. When prices rise or fall above these bars, it usually means a change in the trend has arrived. The combination of the 20-day and the VBP bar at $370 is a doubly important indication of that price level. A look at the Accumulation/Distribution line (ADI) shows that short sellers are not very active in QQQ. You can see a similar picture in On Balance Volume (OBV), which suggests sellers are not overwhelming buyers currently.

The take-home message is that $370 is a very important price point for QQQ. If prices fall below $370 and ADI and OBV turn lower, it will be an indication that lower prices in QQQ are likely. In addition, given the stocks that are housed in QQQ, a big drop in this ETF could spread throughout the market via their influence on major indexes.

Inside QQQ, one stock that is showing quite a bit of relative strength is Tesla (TSLA). The shares have been moving up steadily over the last month and may be ready to challenge the $290-$300 area. ADI and OBV for TSLA are also holding up.  If you're a Tesla fan, you should read this.

One final thought; the Bollinger Bands for QQQ are closing in on current prices. This is a highly reliable predictor that a big move is coming.

Join the smart money at Joe Duarte in the Money You can have a look at my latest recommendations FREE with a two week trial subscription. And for frequent updates on the technicals for the big stocks in QQQ, click here.

The Market's Breadth and Major Indexes Remain in a Tight Volatile Range

The NYSE Advance Decline line (NYAD) is going nowhere, but is doing so in a volatile fashion. Over the last three weeks, NYAD has crisscrossed above and below its 20- and 50-day moving averages, but has neither broken out or broken down. The net effect is that the Bollinger Bands are tightening, as in QQQ above. And that means that a big move in the market is coming, likely affected by whatever the Federal Reserve says and does next week.

The Nasdaq 100 Index (NDX) is caught in the same type of narrow trading range as NYAD. Again, the key is the 15000 where there is a cluster of Volume by Price bars (VBP) and the 50-day moving average. Accumulation/Distribution (ADI) and On Balance Volume (OBV) remain stable.

The S&P 500 (SPX) is trading between 4350 and 4600. As with NDX, there is a cluster of VBP bars and 20- and 50-day moving averages in the area, which means this will be an active trading range.  It's worth noting that ADI is weakening here, which suggests short sellers are moving in. OBV is holding steady, though, which means we could be setting up for another short squeeze.

VIX Remains Below 20  

VIX remains subdued below the 20 area. This is still good news, but has not had much of an effect on the market. A move above 20 would be very negative.

When the VIX rises, stocks tend to fall, as rising put volume is a sign that market makers are selling stock index futures to hedge their put sales to the public. A fall in VIX is bullish, as it means less put option buying, and it eventually leads to call buying, which causes market makers to hedge by buying stock index futures. This raises the odds of higher stock prices.

Liquidity Remains Stable

Liquidity is stable.  The Secured Overnight Financing Rate (SOFR), which recently replaced the Eurodollar Index (XED) and is an approximate sign of the market's liquidity, just broke to a new high in response to the Fed's move. A move below 5.0 would be more bullish. A move above 5.5% would signal that monetary conditions are tightening beyond the Fed's intentions. That would be very bearish.

To get the latest information on options trading, check out Options Trading for Dummies, now in its 4th Edition—Get Your Copy Now! Now also available in Audible audiobook format!

#1 New Release on Options Trading!

Good news! I've made my NYAD-Complexity - Chaos chart (featured on my YD5 videos) and a few other favorites public. You can find them here.

Joe Duarte

In The Money Options

Joe Duarte is a former money manager, an active trader, and a widely recognized independent stock market analyst since 1987. He is author of eight investment books, including the best-selling Trading Options for Dummies, rated a TOP Options Book for 2018 by and now in its third edition, plus The Everything Investing in Your 20s and 30s Book and six other trading books.

The Everything Investing in Your 20s and 30s Book is available at Amazon and Barnes and Noble. It has also been recommended as a Washington Post Color of Money Book of the Month.

To receive Joe's exclusive stock, option and ETF recommendations, in your mailbox every week visit

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Saudi Arabia Sentences Schoolgirl To 18 Years In Prison Over Tweets

Saudi Arabia Sentences Schoolgirl To 18 Years In Prison Over Tweets

Via Middle East Eye,

Saudi Arabia has sentenced a secondary schoolgirl…



Saudi Arabia Sentences Schoolgirl To 18 Years In Prison Over Tweets

Via Middle East Eye,

Saudi Arabia has sentenced a secondary schoolgirl to 18 years in jail and a travel ban for posting tweets in support of political prisoners, according to a rights group.

On Friday, ALQST rights group, which documents human rights abuses in Saudi Arabia, revealed that the Saudi Specialised Criminal Court handed out the sentence in August to 18-year-old Manal al-Gafiri, who was only 17 at the time of her arrest.

Via Reuters

The Saudi judiciary, under the de facto rule of Crown Prince Mohammed bin Salman, has issued several extreme prison sentences over cyber activism and the use of social media for criticising the government.

They include the recent death penalty against Mohammed al-Ghamdi, a retired teacher, for comments made on Twitter and YouTube, and the 34-year sentence of Leeds University doctoral candidate Salma al-Shehab over tweets last year.

The crown prince confirmed Ghamdi's sentence during a wide-ranging interview with Fox News on Wednesday. He blamed it on "bad laws" that he cannot change

"We are not happy with that. We are ashamed of that. But [under] the jury system, you have to follow the laws, and I cannot tell a judge [to] do that and ignore the law, because... that's against the rule of law," he said.

Saudi human rights defenders and lawyers, however, disputed Mohammed bin Salman's allegations and said the crackdown on social media users is correlated with his ascent to power and the introduction of new judicial bodies that have since overseen a crackdown on his critics. 

"He is able, with one word or the stroke of a pen, in seconds, to change the laws if he wants," Taha al-Hajji, a Saudi lawyer and legal consultant with the European Saudi Organisation for Human Rights, told Middle East Eye this week.

According to Joey Shea, Saudi Arabia researcher at Human Rights Watch, Ghamdi was sentenced under a counterterrorism law passed in 2017, shortly after Mohammed bin Salman became crown prince. The law has been criticised for its broad definition of terrorism.

Similarly, two new bodies - the Presidency of State Security and the Public Prosecution Office - were established by royal decrees in the same year.

Rights groups have said that the 2017 overhaul of the kingdom's security apparatus has significantly enabled the repression of Saudi opposition voices, including those of women rights defenders and opposition activists. 

"These violations are new under MBS, and it's ridiculous that he is blaming this on the prosecution when he and senior Saudi authorities wield so much power over the prosecution services and the political apparatus more broadly," Shea said, using a common term for the prince.

Tyler Durden Sun, 09/24/2023 - 11:30

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Biden To Join UAW Picket Line As Strike Expands, Good Luck Getting Repairs

Biden To Join UAW Picket Line As Strike Expands, Good Luck Getting Repairs

Authored by Mike Shedlock via,

In a symbolic, photo-op…



Biden To Join UAW Picket Line As Strike Expands, Good Luck Getting Repairs

Authored by Mike Shedlock via,

In a symbolic, photo-op gesture to win union votes, Biden will head to Michigan for a token visit.

Biden to Walk the Picket Line

Taking Sides

CNN had some Interesting comments on Biden Talking Sides.

Jeremi Suri, a presidential historian and professor at University of Texas at Austin, said he doesn’t believe any president has ever visited a picket line during a strike.

Presidents, including Biden, have previously declined to wade into union disputes to avoid the perception of taking sides on issues where the negotiating parties are often engaged in litigation.

On September 15, the day the strike started, Biden said that the automakers “should go further to ensure record corporate profits mean record contracts for the UAW.”

Some Democratic politicians have been urging Biden to do more. California Rep. Ro Khanna on Monday told CNN’s Vanessa Yurkevich that Biden and other Democrats should join him on the picket line.

“I’d love to see the president out here,” he said, arguing the Democratic Party needs to demonstrate it’s “the party of the working class.”

UAW Announces New Strike Locations

As the strike enters a second week, UAW Announces New Strike Locations

UAW President Shawn Fain called for union members to strike at noon ET Friday at 38 General Motors and Stellantis facilities across 20 states. He said the strike call covers all of GM and Stellantis’ parts distribution facilities.

The strike call notably excludes Ford, the third member of Detroit’s Big Three, suggesting the UAW is more satisfied with the progress it has made on a new contract with that company.

General Motors plants being told to strike are in Pontiac, Belleville, Ypsilanti, Burton, Swartz Creek and Lansing, Michigan; West Chester, Ohio; Aurora, Colorado; Hudson, Wisconsin; Bolingbrook, Illinois; Reno, Nevada; Rancho Cucamonga, California; Roanoke, Texas; Martinsburg, West Virginia; Brandon, Mississippi; Charlotte, North Carolina; Memphis, Tennessee; and Lang Horne, Pennsylvania.

The Stellantis facilities going on strike are in Marysville, Center Line, Warren, Auburn Hills, Romulus and Streetsboro, Michigan; Milwaukee, Wisconsin; Plymouth, Minnesota; Commerce City, Colorado; Naperville, Illinois; Ontario, California; Beaverton, Oregon; Morrow, Georgia; Winchester, Virginia; Carrollton, Texas; Tappan, New York; and Mansfield, Massachusetts.

Contract Negotiations Are Not Close

Good Luck Getting Repairs

Party of the Working Cass, Really?

Let’s discuss the nonsensical notion that Democrats are the party of the “working class”.

Unnecessary stimulus, reckless expansion of social services, student debt cancellation, eviction moratoriums, earned income credits, immigration policy, and forcing higher prices for all, to benefit the few, are geared towards the “unworking class”.

On top of it, Biden wants to take away your gas stove, end charter schools to protect incompetent union teachers, and force you into an EV that you do not want and for which infrastructure is not in place.

All of this increases inflation across the board as do sanctions and clean energy madness.

Exploring the Working Class Idea

If you don’t work and have no income, Biden may make your healthcare cheaper. If you do work, he seeks to take your healthcare options away.

If you want to pay higher prices for cars, give up your gas stove, be forced into an EV, subsidize wind energy then pay more for electricity on top of it, you have a clear choice. If you support those efforts, by all means, please join him on the picket line for a token photo-op (not that you will be able to get within miles for the staged charade).

But if you can think at all, you understand Biden does not support the working class, he supports the unworking class.

Tyler Durden Sun, 09/24/2023 - 10:30

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UK Quietly Passes “Online Safety Bill” Into Law

UK Quietly Passes "Online Safety Bill" Into Law

Authored by Kit Knightly via,

Buried behind the Brand-related headlines…



UK Quietly Passes "Online Safety Bill" Into Law

Authored by Kit Knightly via,

Buried behind the Brand-related headlines yesterday, the British House of Lords voted to pass the controversial “Online Safety Bill” into law. All that’s needed now is Royal assent, which Charles will obviously provide.

The bill’s (very catchy) long-form title is…

A Bill to make provision for and in connection with the regulation by OFCOM of certain internet services; for and in connection with communications offences; and for connected purposes.

…and that’s essentially it, it hands the duty of “regulating” certain online content to the UK’s Office of Communications (OfCom).

Ofcom Chief Executive Dame Melanie Dawes could barely contain her excitement in a statement to the press:

“Today is a major milestone in the mission to create a safer life online for children and adults in the UK. Everyone at Ofcom feels privileged to be entrusted with this important role, and we’re ready to start implementing these new laws.”

As always with these things, the bill’s text is a challenging and rather dull read, deliberately obscure in its language and difficult to navigate.

Of some note is the “information offenses” clause, which empowers OfCom to demand “information” from users, companies and employees, and makes it a crime to withhold it. The nature of this “information” is never specified, nor does it appear to be qualified. Meaning it could be anything, and will most likely be used to get private account information about users from social media platforms.

In one of the more worrying clauses, the Bill outlines what they call “communications offenses”. Section 10 details crimes of transmitting “Harmful, false and threatening communications”.

It should be noted that sending threats is already illegal in the UK, so the only new ground covered here is “harmful” and/or “false” information, and the fact they feel the need to differentiate between those two things should worry you.

After all, the truth can definitely be “harmful”…Especially to a power-hungry elite barely controlling an angry populace through dishonest propaganda.

Rather amusingly, the bill makes it a crime to “send a message” containing false information in clause 156…then immediately grants immunity to every newspaper, television channel and streaming service in clause 157.

Apparently it’s OK for the mainstream media to be harmful and dishonest.

But the primary purpose of the new law is a transfer of responsibility to enable and incentivize censorship.

Search engines (“regulated search services”, to quote the bill) and social media companies (“regulated user-to-user services”) will now be held accountable for how people use their platform.

For example: If I were to google “Is it safe to drink bleach?”, find some website that says yes, and then drink bleach, OfCom would not hold me responsible. They would hold Google responsible for letting me read that website. Likewise, if someone tweets @ me telling me to drink bleach, and I do so, Twitter would be held responsible for permitting that communication to take place.

This could result in hefty fines, or even potentially criminal charges, to companies and/or executives of those companies. It could even open them up to massively expensive civil suits (don’t be surprised if such a legal drama hits the headlines soon).

Unsurprisingly the mainstream coverage of the new laws barely mentions any of these concerns, instead opting to put child pornography front and centre. Because the Mrs Lovejoy argument always works.

That’s all window dressing, of course, what this is really about is “misinformation” and “hate speech”. Which is to say, fact-checking mainstream lies and calling out mainstream liars.

Section 7(135) is entirely dedicated to the creation of a new “Advisory committee on disinformation and misinformation”, which will be expected to submit regular reports to OfCom and the Secretary of State on how best to “counter misinformation on regulated services“.

This is clearly a response to Covid, or rather the failure of Covid.

Essentially, the pandemic narrative broke because the current mechanisms of censorship didn’t work well enough. In response, the government has just legalised and out-sourced their silencing of dissent.

See, the government isn’t going to actually censor anyone themselves, protecting it from pro-free speech criticism. Rather, huge financial pressure will be applied on tech giants to be “responsible” and “protect the vulnerable”. Meaning de-platforming and cancelling independent media via increasingly opaque “terms of service violations”

These companies will be cheered on by the vast crowd of jabbed-and-masked NPCs who have been so successfully brainwashed into believing the “they are a private company and can do that they want” argument.

This has been going on for years already, of course, but that was covert stuff. Now it’s legal in the UK, and is about to get a lot worse.

It won’t be just the UK either, considering the messaging on “misinformation” being seen at the UN in the last few days, we should expect something similar on a global scale.

You can read the full text of the Online Safety Bill here.

Tyler Durden Sun, 09/24/2023 - 08:10

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