Summary

Well, that was ugly. The S&P 500 (SPX) dropped 1.6% on Wednesday, the largest one-day decline since April 21. We all should remember how terrible much of April was, specifically between the 4/2 and 4/21. Since then, we have been spoiled rotten as the major indices pushed higher. Looking back at the recovery from the pandemic, we note that the SPX pulled back several times before it reclaimed all-time highs -- so a cooling-off period now is probably just what the doctor ordered. It's hard to tell when these pullbacks will come, as the stock market likes to smack investors in the face when complacency has become the order of the day. The SPX closed right on its 10-day exponential moving average (EMA), a typical area of initial support. Just below, a 38.2% retracement from the move off the April 21 intraday low sits at 5,760, also the location of the 200-day average and rising 21-day EMA. There is an open gap down to 5,692, with a 50% retracement near 5,700. The reason for the stock drop on Wednesday was a disappointing 20-year Treasury bond auction, which led to a spike in rates. Both the 10- and 30-year rose 12 basis points to 4.6% and 5.1%, respectively. The short end of the curve did little, with the two-year up four basis points to 4.01%. Losses were broad, wi