My friend and colleague, Dr. Joe Duarte, chief investment strategist of our premium trading service Profit Catalyst Alert, is a seasoned technical trader. He sent me the following message on Slack this morning and it’s just too good to keep to myself:

“John, it’s a quirky world, but when it comes to the market, the bots have taken out the human element and they’ve been programmed based on classic analysis, e.g.: Don’t fight the Fed; Don’t fight the bond market; Moving averages matter; Sentiment extremes offer buying and selling opportunities…etc.

There is no real doubt left in the market anymore, which is why technical analysis works so much better now than it ever has. This dynamic may change tomorrow, but that’s what’s happening today. And really, all we’ve got is today. The market is now traded by black boxes. If you don’t emulate the black boxes, you will get hurt.”

Alrighty, then. So what is technical analysis telling us on this Friday the 13th? Below, I provide snapshots and interpretive analysis of key charts.

What the charts are saying…

The benchmark SPDR S&P 500 ETF Trust (SPY) in recent days has dipped below its 50-day moving average, due to rising bond yields and geopolitical turmoil. However, the SPY still hovers above its 200-day moving average and it’s now knocking on the door of its 50-day threshold:

Moving averages are key technical indicators. A moving average helps smooth out price data by creating a constantly updated average price.

A rising moving average indicates that the security or index is in an uptrend, while a declining moving average indicates a downtrend. The shorter the moving average, the sooner you’ll see an actual change in the market.

The benchmark 10-year U.S. Treasury yield (TNX) hovers above its 50- and 200-day moving averages and has ticked higher in recent days to about 4.70%, its highest level since the beginnings of the Great Financial Crisis in 2007:

The latest U.S. consumer price index (CPI) and producer price index (PPI) readings this week, both for the month of September, were only mildly higher than expectations but some traders worry that the readings could prompt the Federal Reserve to hike interest rates at least one more time this year.

Accordingly, the 10-year yield has risen past its multi-year resistance level of 4.50%, which is a bearish sign. Bond yields and stocks tend to move in opposite directions.

Keep your eye on the 10-year yield. If it continues its ascent, it will signal that Wall Street fears excessive monetary tightening will trigger a swift economic retreat.

In a positive omen, the New York Stock Exchange Advance/Decline Line (NYAD) has been holding above its support level, which is bullish considering the volatility and nastiness of the overall stock market in recent weeks:

The NYAD shows how many stocks are advancing versus declining in any given period on the New York Stock Exchange. A rising NYAD is bullish, because it denotes improving market breadth. The converse is true when it’s falling.

The CBOE Volatility Index (VIX) has been rising and now approaches the worrisome threshold of 20, which denotes rising fear and stress in the markets.

A reading of the VIX above 20 indicates that the markets during the next 30 days will experience markedly higher volatility.

Read This Story: Vexed By The VIX

However, on the fundamental front, there’s good news. On Friday, third-quarter corporate earnings season started on a positive note.

JPMorgan Chase (NYSE: JPM), Wells Fargo (NYSE: WFC), Citigroup (NYSE: C), and PNC Financial Services (NYSE: PNC) all reported Q3 earnings per share that exceeded expectations.

The Big Banks are bellwethers for the overall economy; their robust operating results so far bode well for the economy and by extension the stock market.

However, strong Q3 corporate operating results were overshadowed on Friday by worries about the bloody Israel-Hamas war and eroding consumer sentiment.

The University of Michigan reported Friday that the preliminary reading of its closely followed Consumer Sentiment Index fell to 63 for this month, down from September’s reading of 68.1. The number was far weaker than expected, with the consensus forecasting a drop to 67.2.

The main U.S. stock market indices closed mostly lower Friday as follows:

• DJIA: +0.12%
• S&P 500: -0.50%
• NASDAQ: -1.23%
• Russell 2000: -0.84%

Safe haven assets such as gold rallied. Crude oil prices surged 5%. The mood on the last trading day of the week was decidedly “risk off.” That said, the S&P 500 notched its second consecutive positive week.

As I’ve just explained, the market is a mixed bag these days. The upshot, according to Dr. Duarte: “Stay invested in what’s working while looking through sectors where value is rising in preparation for the next buying opportunity.”

Speaking of buying opportunities…You should know that Dr. Joe Duarte has unearthed a tiny, under-the-radar company that has developed a revolutionary “black box” technology. This game-changing opportunity is poised to generate market-thumping gains, regardless of Federal Reserve policy or the market’s ups and downs. Click here for details.

John Persinos is the editorial director of Investing Daily.

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