 Hey everyone, this is Mike of my capital with your weekly check-in It's a Monday night around six o'clock New York time So markets are closed here in the US S&P 500 finished today slightly higher Nasdaq finished today about 55 basis point higher and the Dow Jones finished about 14 basis points higher so today we're going to be looking at the Nasdaq and we'll be looking at the Dow and Interesting thing here about the Nasdaq you can see it's Continuing to just grind higher right now. It's in between Filling a gap that goes back to August 18th so we've completed a bunch of gap fills here on the Nasdaq and This would be the next major level of resistance around 13,000 550 or so and What's interesting about the Nasdaq presently is that you can see we're kind of Grinding higher, but if you notice it looks it's very clear and very easy to see you have What's known as a bearish rising wedge and that usually will result in the index Reversing and giving back these gains When we put the lines and you can see it more clearly here, you can see the consolidation Really occurring now in the squeeze coming together. I mean at this point It looks like we only have a few more days Maybe one or two more days before we're going to get a definitive break out and move up Significantly or a move down and break down and at least are coming back to some of these lower trend lines Again, these are very tricky to they tend to be Reversal patterns and they tend to result in the in the move coming down Additionally, we still continue to see a very bearish divergence forming on the Nasdaq 100 With the RSI, which is still clearly trending lower The other thing that's important to note here is really going to be yields and where they're going to go from here because tomorrow We're going to be getting retail sales and so retail sales are Obviously going to give us an idea of how the economy is doing and it could even give us a little bit of an indication in terms of where What the Fed may may be thinking about next June for the June meeting because again, we've had you know strong labor market Very tight wage growth was certainly higher than expected in the April report Inflation rates are still very high much higher than what the Fed's target is inflation on the core level extremely high You're going to have Jay Powell also talking with Ben Bernanke on Friday in a monetary policy discussion Hosted by the Fed that's going to be on around 11 a.m. New York time So there's a lot of reasons why we can see a lot of volatility in rates over the next couple of days And it's worth keeping an eye on the tip ETF and the TLT ETF Especially when it comes to assessing where the Nasdaq may be going you can see right now that the TLT has sort of Come down and is now trading with this new support level. This was an old support level that clearly has changed And now we can clearly see that that support level is just a little bit lower around this 103 area And if we get a break in the TLT below 103 It's going to be an indication that yields on the longer end of the curve are rising And that's probably also going to be an indication that the tip ETF is Falling as well and that real yields are rising and again the tip ETF has had a very strong correlation with the Nasdaq 100 over the last couple of years and so if you begin to see things like the the Nasdaq 100 rising in a divergent manner from the tip like you're currently seeing It can be a warning sign that you know the Nasdaq is really getting extremely overvalued versus the The versus really yields and when they start going in opposite directions It really should be a wake-up call in terms of you know Which way the equity market is going and whether or not it really makes a whole lot of sense from a fundamental standpoint So you're gonna want to watch to see if you get more follow-through in the tip ETF Because that could be an indication that the Nasdaq is really going in the wrong direction and has some room to correct and Again with the sort of bearish setup that you're seeing in the Nasdaq currently You know one has to think that it's not going to take much at this point To really get some of this froth out of the market because at the end of the day you've seen valuations really become stretched and While there could be a little bit more room to the upside like we said to this 13,500 region I mean we're only talking about you know another 80 to 90 points on the NDX which is not a lot and so your risk reward at this point is getting skewed much more to the downside With this really with this rally going on we've been talking about the different levels where we could go along the way and You know, this is sort of again really getting to the upper end of the range in this rising wedge pattern So again, what I would watch for if I were thinking about where we're going to go tomorrow As you think about where the tip ETF is all we're gonna is our real is the retail sales number going to move yields If you'll start moving higher that is going to pressure equities at some point because again If you're looking at the 30 year rate right now, it's breaking up out and trying to test Right now. It's kind of testing the upper area the upper zone of what's been What's been resistance and if we break out really from this range? There's not much to keep the 30 year going from about 4% Which would start pushing it back towards the higher end of the range and that would probably mean you'd get a tip ETF Moving back down towards the lower end of the range and that's going to pressure equities over the more of the short to medium term So again, if you start seeing real yields moving up meaning the tip me moving down the TLT moving down That's going to be an indication that you really got to be watching these support levels in the Nasdaq very closely Because if you get a big move in rates tomorrow that could potentially be a What really ultimately breaks this pattern on the flip side as well? Obviously if you get rates moving down Significantly the TLT the tip moving up that's going to accelerate this rise in the market and potentially work the index to filling this This gap up here at thirteen thousand five hundred or so on the Dow is not all that much different the Dow Has a little bit of a different construction because the Dow is a point-weighted index as opposed to the Nasdaq Which is a market cap weighted index to big tech themes even though they're in the Dow They don't have the same sort of weighting. They don't have the same sort of meaning The Dow is much more heavily influenced by things like financial and health care For example, UNH is one of the biggest components in the Dow And so you're going to want to keep an eye on these bigger components because again These are the ones that are really moving the Dow much more so than let's say an Apple at this point in the game And you can see it even with like a Goldman Sachs for example, which has been very weak And this is one of the reasons why you've seen the Dow sort of underperform the other indexes and you can see it much more clearly when you start looking at it from this standpoint because You can see that very clearly that the Dow has very much been trading flat to down while the Nasdaq's actually been rising