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Bonds Hold the Whip Hand—Quarter-End Has One More Trick
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Only 40.8% of S&P 500 stocks are above their 200-day moving average — meaning 59.2% are below it, the weakest breadth reading since May 6, 2025. I told the PitBull today that where we are right now feels exactly where we were in 2007 when he told me there was rotten wood floating around in the market leading stock sectors, the brokerage stocks and bank stocks but the difference is the tech and Ai stocks and the spiraling debt.
In June 2007, the Fed funds target was 5.25% and Treasury yields were tightly clustered near 5%, with the 2-year at about 4.96%, the 5-year at 5.00%, the 7-year at 5.03%, the 10-year at 5.05%, and the 30-year at 5.10%, producing a relatively flat yield curve.
By contrast, on September 29, the Fed funds target is much lower at 3.75%–4.00%, while Treasury yields are higher farther out the curve, with the 2-year near 4.94%, the 5-year around 5.06%, the 7-year near 5.15%, the 10-year around 5.29%, and the 30-year near 5.62%.
The key difference is that 2007 featured a high policy rate and a flat curve, while 2026 features a lower policy rate but a much steeper long end, with the 10- and 30-year yields trading well above the Fed funds rate and the 30-year more than half a percentage point above its 2007 level.
I think there are legitimate reasons to be concerned about the stock market because several risks are hitting at the same time. The Fed has already raised rates in September, and additional hikes remain on the table, while long-term Treasury yields have climbed sharply, with the 10-year above 5%.
At the same time, U.S. federal debt is around $40 trillion, crude oil is near $90 compared with roughly $65 at this time last year, and energy volatility is adding to inflation pressure, making it more difficult for the Fed to ease policy.
Market breadth is also deteriorating, with more than 40% of S&P 500 stocks already at least 20% below their 52-week highs even though the index remains near record territory, leaving the market increasingly dependent on a relatively small group of mega-cap stocks.
Add weakening consumer confidence and the uncertainty surrounding the November midterm elections, and the combination of high rates, elevated oil prices, narrow leadership, and political uncertainty leaves equities more vulnerable to a meaningful volatility event or correction.
Is it fair to say we are heading into a 2007–2008 credit-crisis-style stock market selloff? Not exactly. There are genuine warning signs developing, particularly in private credit and refinancing, but we are not currently seeing the broad financial-system stress that characterized 2008. That does not mean, however, that the shakeout in stocks cannot continue.
Lastly, the credit crisis lasted roughly 22 months, and the S&P 500, from its October 9, 2007 peak at 1565.15 to its March 9, 2009 low at 676.53, lost 56.8%. Currently, the ES is only about 1.35% off its all-time high, and the NQ is only about 1.45% off its all-time high.
I didn’t write this to say the markets are going to crash or that we are in a credit crisis. The point is that despite all the negatives, the markets have not fallen very far. The question is: how long can this go on before a major correction?
The answer... until the Fed stops supplying liquidity!
Our Lean — Danny’s Trade (Premium only)
Tuesday’s Globex session opened at 7746.50 at 6:00 p.m. ET Monday. The first five-minute bar dipped to 7741.00, and the overnight low of 7716.00 came in the 1:35–1:40 a.m. ET bar. Buyers worked it back up before the cash open: the full-session high of 7770.75 printed in the 7:45–7:50 a.m. ET bar. That was the best price of the entire session. The last pre-cash bar closed at 7757.50, an 11.00-point gain from the Globex open. Overnight bar volume totaled 279252 contracts.
The cash open brought an immediate offer. ES opened at 7757.50 at 9:30 a.m. ET, touched 7758.50 in that opening bar, and was back at 7743.25 by its end. A bounce toward the mid-7740s did not reclaim the opening high. By noon the contract was probing the 7715 area, and the regular-session low of 7712.25 arrived in the 1:00–1:05 p.m. ET bar. The sellers had taken 46.25 points out of the opening high.
The afternoon finally found a bid. The 2:00–2:05 p.m. bar carried ES from 7715.25 to 7726.00, and the contract was back around 7739 by the end of the 3:00–3:05 bar. At the start of the 3:50 bar ES was 7731.25. It reached 7737.50 during that bar, then the final five minutes swept down to 7727.00 before the last RTH bar closed at 7732.50. That was a 25.00-point loss from the cash open.
Cleanup trade recovered to 7738.25 at the end of the 5:00 p.m. ET session. Regular-session bar volume was 1211290; full-session bar volume was 1534529. In the end, ES recovered from the day’s low but left its morning high standing. NQ’s full-session range was 30372.25–30725.50, with a 30652.75 last price, a separate official settlement of 30613.25 and official cleared volume of 678480. The lesson from the tape: finding a bid after a selloff is useful; getting back above the opening business is the next test.
30-Year Treasury Bond Futures — Back to 2004 Levels
CBOT 30-Year Treasury Bond futures (ZB) traded down to 103-14, pushing the long bond into price territory not seen in roughly 22 years.
The last major historical instance where ZB traded at 103-14 or lower was May 2004, when the June 2004 ZB contract fell to 103-02 — 12/32 below the current 103-14 level.
In the end the ES has been stuck in a range trade. In terms of the ES's overall tone it was weak but not as bad as it could have been considering the bonds (ZBZ26) traded all the way down to 103.14. In terms of the ESs overall trade, volume was lower at 1.53 million
S&P 500 (ES)
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CYCLE DAY 3 — RESPECT THE ODDS
Bulls have to hold the Cycle Day 1 Low (7726) to complete the mission.
The 92.37% Positive Three-Day Cycle statistic provides the historical backdrop.
Notice we said probability…
Not prophecy.
The statistic gives us the directional edge.
Price still has to prove it.
BULL SCRIPT
Acceptance Above 7745 ±5
Bull Roadmap
7755
7765
7775
Acceptance Below 7745 ±5
BEAR Roadmap
7735
7725
7715
Key Structural Reference Levels
These aren’t forecasts.
They’re magnets.
PVA High Edge: 7745
PVA Low Edge: 7723
Prior POC: 7732
Cycle Day 1 Low: 7726
These are the areas where the auction naturally slows, rotates, negotiates—and ultimately decides.
Trade the structure.
Respect the auction.
Let the market reveal its hand before you play yours.
PTG EXECUTION PROTOCOL
Take only Triple-A setups.
Manage the $risk.
ALWAYS HAVE HARD STOP-LOSSES in place on the exchange.
No chasing.
No predicting.
No heroic attempts at catching falling knives.
Tactical Takeaway
Of course, nothing changes for PTG…Simply follow your plan. Take only Triple A setups and manage the $risk. ALWAYS HAVE HARD STOP-LOSSES in-place on the exchange.
PTG’s Primary Directive (PD) is to ALWAYS STAY IN ALIGNMENT with the DOMINANT FORCE.
ES
— PTG
Goldman’s month-end/quarter-end pension estimate is a meaningful potential flow headwind, but it is important to understand what the number represents. Goldman’s model estimates that U.S. pensions may need to sell about $32 billion of U.S. equities, made up of roughly $10 billion of normal month-end rebalancing plus another $22 billion tied to quarter-end rebalancing. Goldman says that size ranks in roughly the 95th percentile of all buy/sell estimates over the past three years and the 97th percentile going back to January 2000, so this is an unusually large modeled rebalance rather than routine month-end noise.
The reason is mechanical: when equities outperform bonds, balanced pension portfolios become overweight stocks relative to their target allocations. To bring those portfolios back to policy weights, pensions may sell equities and buy fixed income. Goldman has used the same framework in prior months; for example, in May it modeled about $14 billion of equity selling/bond buying after stocks materially outperformed Treasuries.
What makes this month more notable is the broader flow backdrop. A secondary summary of Goldman’s desk work says 87% of S&P 500 companies are already in buyback blackout, rising toward 93%, which means one of the market’s traditional sources of demand is temporarily diminished just as pension rebalancing supply may hit. That same summary says systematic strategies could still provide some buying, so this is more of a large supply-versus-demand tug-of-war than a guaranteed selloff.
Tuesday’s MOC opened with a selling imbalance at $1.1B to sell, reflecting $2.3B in buying against $3.4B in selling.
NYSE accounted for $807.9M of the opening sell imbalance, while Nasdaq showed $301.0M to sell. The S&P 500 registered $1.2B to sell. Despite the negative dollars, the overall symbol lean was just -52.6%, pointing to rotation and concentrated selling rather than a wholesale market liquidation.
The transition was anything but smooth. Selling eased to $111.0M at 3:53 p.m., widened to $1.5B at 3:54, and nearly disappeared at 3:55 with only $1.0M to sell. That balance broke sharply at 3:56: buying dropped to $1.2B while selling climbed to $4.0B, producing the session’s largest net sell reading of $2.8B. The imbalance remained above $2.4B to sell through 3:58 before shrinking to $739.0M at 4:00.
SNDK led individual selling at $156.6M, followed by CRM at $150.0M, LRCX at $138.7M, and GOOG at $118.9M. TSLA, IBM, MSTR, and META also carried notable sell orders. Buyers favored SPCX at $167.7M, MU at $151.4M, AAPL at $144.0M, SLB at $111.6M, and GOOGL at $103.1M. Opposing GOOG and GOOGL flows underscored the stock-specific crosscurrents.
Technology led sector selling at $386.0M, followed by industrials at $376.1M and financials at $283.8M. Energy, utilities, and materials attracted modest net buying. Consumer discretionary showed net selling despite a positive symbol lean, another sign of concentrated pressure.
The closing symbol lean reached -63.1%, stronger than the opening but below the -66.0% wholesale-selling threshold. Sellers controlled the late auction, while selective buying persisted beneath the headline imbalance.
DAILY BREADTH · September 29, 2026 | ||
Measure | NYSE | NASDAQ |
|---|---|---|
Advancing issues | 1,149 | 1,961 |
Declining issues | 1,601 | 2,960 |
Advancing issues % | 42% | 40% |
Advancing volume · M shares | 2,115.1 | 3,440.9 |
Declining volume · M shares | 2,835.4 | 3,526.3 |
Upside volume % | 43% | 49% |
TRIN | 0.96 | 0.68 |
New 52-week highs | 20 | 68 |
New 52-week lows | 403 | 488 |
Completed U.S. cash session; reported closing TRIN when available. Source: WSJ Markets Diary. Feed: Tuesday, September 29, 2026.
WEEKLY BREADTH · WEEK ENDING · September 25, 2026 | ||
Measure | NYSE | NASDAQ |
|---|---|---|
Advancing issues | 919 | 2,164 |
Declining issues | 1,906 | 3,035 |
Advancing issues % | 33% | 42% |
Advancing volume · M shares | 11,034.6 | 23,144.0 |
Declining volume · M shares | 13,580.7 | 18,316.1 |
Upside volume % | 45% | 56% |
TRIN | 0.59 | 0.56 |
New 52-week highs | 70 | 323 |
New 52-week lows | 575 | 769 |
WSJ Weekly Totals; TRIN calculated from weekly issues and volume. Highs/lows are not unique-name counts. Source: WSJ Markets Diary. Feed: Friday, September 25, 2026.
ES & NQ Futures trading levels (Premium only)
Time ET | Event | Source |
|---|---|---|
8:15 a.m. | September ADP National Employment Report | |
8:30 a.m. | August Personal Income and Outlays / PCE; annual updates | |
8:30 a.m. | Q2 GDP, third estimate, corporate profits and annual updates | |
After close; 4:30 p.m. call | Micron fiscal Q4 earnings; call is 2:30 p.m. Mountain |
Verified featured catalysts; this is not a complete listing of every company report or Fed speech. All morning releases were still upcoming when this issue was prepared.
Discovery Trading Group Room Preview – Wednesday, September 30, 2026
Macro Setup
U.S. index futures are modestly higher ahead of Core PCE and GDP, the session’s primary macro catalysts.
Treasury yields remain elevated, keeping financial conditions tight and pressure on rate-sensitive sectors.
An upside inflation surprise could quickly push yields higher and pressure ES and NQ.
The U.S. dollar remains firm near a two-month high, adding another headwind for multinational tech and industrial names.
Oil and Geopolitics
Crude is moving higher after President Trump denied being willing to ease Iran sanctions, keeping geopolitical risk premiums elevated.
Abu Dhabi is reportedly investing heavily in infrastructure designed to reduce dependence on the Strait of Hormuz, highlighting longer-term shifts in regional energy logistics.
Higher oil prices continue to complicate the Fed’s inflation outlook and make crude an important intraday driver for index futures.
AI and Tech
President Trump floated the idea of AI “self-regulation” following meetings with major technology executives, putting AI policy back in focus.
OpenAI is reportedly discussing a $30 billion capital raise at a $1.4 trillion valuation, highlighting the enormous capital requirements of frontier AI.
Anthropic’s IPO prospectus underscores the industry’s dependence on large technology partners and concentrated infrastructure providers.
DeepSeek and Huawei are reportedly working on chip-programming tools aimed at reducing reliance on Nvidia, adding another layer to U.S.–China semiconductor competition.
NQ and semiconductor names remain especially sensitive to AI policy, export-control, and supply-chain headlines.
Today’s Market Focus
Core PCE and GDP are expected to dictate the early-session direction.
Other key cross-asset drivers include Treasury yields, crude oil, dollar strength, and AI-related headlines.
Sector dispersion remains wide, with AI and megacap technology stronger while rate-sensitive and consumer-facing groups continue to lag.
No whale bias is in place this morning, with overnight large-trader volume light and mixed.
Economic Calendar
8:15 AM ET: ADP Non-Farm Employment Change.
8:30 AM ET: Core PCE Price Index, GDP, GDP Price Index, and Goods Trade Balance.
9:45 AM ET: Chicago PMI.
10:30 AM ET: Crude Oil Inventories.
1:30 PM ET: Richmond Fed President Barkin speaks.
3:15 PM ET: Fed Governor Cook speaks.
Earnings
Premarket: Jabil (JBL).
After the bell: Micron Technology (MU).
Thursday morning: Accenture (ACN) and McCormick & Company (MKC).
ES Volatility and Structure
The ES 5-day average daily range increased to 72.75 points from Monday’s 68.50, keeping volatility elevated.
ES continues to trade near the middle of its roughly 7650–7850 five-week range.
The former short-term downtrend channel near 7823–7828 remains the first major resistance area.
On the downside, bears have room toward the 7640–7645 trendline if support gives way.
ES bounced from its 50-day moving average near 7731.50 on Tuesday for the second consecutive session and closed above it, keeping that area as loose support.
A sustained break below the 50-day could turn the moving average into resistance.
Key ES Levels
Resistance: 7823–7828, then 7980–7985.
Support: 7640–7645, 7480–7485, then 7407–7412.
Risk Watch
Geopolitical developments involving Iran, Ukraine, Israel, and the West Bank remain potential volatility catalysts.
President Trump’s social-media posts also remain a potential source of sudden headline-driven market movement.
