We are diverging paths once again. Bond yields are moving higher, and stocks are moving lower. More specifically, the ten-year yield is marching higher, and the NASDAQ Composite (IXIC) is back to a test of critical support. At this rate, a retest of the high on the ten-year yield could see big new 2022 lows for the IXIC.

I’m unsure how the index turns it around with tax-loss selling to the final session of the year and no urgency by anyone to buy at a must-hold support point.

S&P 500 Struggles

It’s the same old story of 2022 – buy safety, even if it’s expensive on a relative basis (save for Energy (XLE), which is among the cheapest sectors, but the one with the most variables).

Consumer Discretionary (XLY) was an unmitigated disaster as the Tesla’s (TSLA) crash worsened.

Skid Road for Tesla

Production slowdown in China was the latest news to upend shares of Tesla (TSLA). But even before Musk bought Twitter, the establishment had a bone to pick with the once-richest-man-in-the -world.  The reaction to the Shanghai news seems overdone, but the stock is in freefall, and the bottom is a guessing game at this point.

A couple of years ago, the shorts lost more than $40 billion going against Musk, yet the current short position is very low compared to 2020.   

Tesla wasn’t the only mega-cap name to take it on the chin.  I don’t know how long we can call TSLA a mega-cap since peaking at a $1.2 trillion market-cap in November 2021 - it’s down to $350 billion.

Today’s Session

Nothing is really standing out this morning and looks like a small bounce at the open. 

After filling a sizable gap (see circle), the S&P 500 is trying to build a base around 3,800 and actually maintain gains for the quarter.  This is a very important support level, as the inability to hold will raise the chorus calling for a re-test of the 2022 low.