The release of the FOMC minutes raised the possibility that the Fed may start reducing its bond buying in the next few months. The yields on the 10-year T-note rose sharply to levels last seen in September.
The selling in the stock market was not heavy yet but further "taper tantrums", as I mentioned in August, should create another good buying opportunity in the stock market. The small-cap Russell 2000 Index continues to look the most vulnerable, and despite the S&P 500′s longest losing streak in eight weeks, it has not generated any daily sell signals.
The higher rates hit the DJ Utility Average the hardest as it was down 1.4% while the Nasdaq Biotech Index bucked the trend. Gold stocks were hit hard as the bull trap closed over a week ago. Gold is getting oversold and should get an oversold bounce in the next week.
In early trading, the futures are showing nice gains, and without convincing sell signals, there is no reason to turn bearish on the market. Still, this is a market to watch closely as the reversals on Monday and Wednesday are signs of a tired market. A sharply lower weekly close could lead to further profit-taking next week and here are some levels you should be watching.
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Chart Analysis: The daily chart of the Spyder Trust (SPY) shows that is still well above the rising 20-day EMA at $176.97.