Why a Logarithmic Scale
For long-term charts I use a logarithmic scale, a common choice among technical analysts, because it shows price moves as a percent rather than in points. A stock going from $5 to $10 is only a $5 move, but it is a 100% gain. A move from $100 to $105 is the same $5 yet means far less. The log scale makes these percent moves show up at their real weight.
S&P 500 (SPX)
The index has traded sideways since breaking its all-time high in early August. The picture is getting a little better. It keeps holding the key area around 7,600, the old resistance line that now acts as support. That level has been tested many times, and the more often a support line holds, the more the market confirms it matters. Each retest of the 7,600 gap brought in buying that kept the uptrend alive. A break below 7,600 would change the market picture.
What matters more is what sits under the surface. A recent jump to new yearly lows on the New York Stock Exchange usually shows up in a correction. That looks worrying at first, but past patterns say it is a positive sign: over the past year, whenever this reading spiked, the whole index was near a bottom. So it points to an internal cleanup before the trend starts again and market breadth widens. That sets up a healthier rotation.
The 20-day correlation between the S&P 500 (SPX) and the dollar index (DXY) has hit its highest level in the past year. When a correlation gets this extreme, it often marks a turning point - here, a likely top for the dollar. If the dollar turns down, appetite for risky assets could come back. The dollar's path ties closely to monetary policy and interest rates.
10-Year Treasury Yield
Rates sit at multi-year highs, with the 10-year Treasury yield near 4.748%. This chart shows yields, not prices. The yield holds a clear uptrend and has broken above major resistance near 4.70%, forming higher highs and higher lows.
The level to watch now is the Fibonacci retracement from recent swings, which points to likely resistance near 4.81%. A further resistance sits around 4.9%. Momentum still reads positive: the MACD line is above zero, showing an uptrend. But it is not rising as fast as price, so a clear bearish divergence has appeared - a warning to watch closely while rates climb. The uptrend looks like it is losing steam as it hits resistance.
Rising rates carry several messages: higher expectations for economic activity and a chance of lasting inflation pressure over the long term, plus shifting views on monetary policy. Traders are focusing more on the pace of rate hikes. There is a real chance the rate momentum gets reset or adjusted.
Crude Oil
Crude broke out of a symmetrical triangle pattern that had run for several months, with a series of higher lows and lower highs squeezing together. Volatility compressed under the surface, and tight volatility usually sets up a big move. Price broke the short-term resistance line at the earlier gap near 87, which also lines up with the fixed VWAP from the prior high.
It hit resistance near 93.50 this week, so a small pullback next week is possible, with a chance it retests 87 - now old resistance turned new support. Energy stocks are being re-rated, with positioning ahead of higher oil prices and a relative breakout of energy shares against the S&P index (SPX). The breakout came with stronger momentum and above-average volume, showing real investor participation. So the breakout looks confirmed. A correction may come, but the long-term outlook for crude is bullish.
That is not what American consumers want to hear, but a chart is just a chart.
