Yahoo Finance's Jared Blikre breaks down how markets opened on Wednesday.

Video Transcript

- Let's head down to the floor of the New York Stock Exchange now and check in with Yahoo Finance's Jared Blikre, Jared?

JARED BLIKRE: Indices are pretty quiet today. Nice to see a little bit of green on the screen. But I'm taking a longer term view of the markets on the YFi Interactive. All of them are at the Rubicon right now.

We were talking about this with Matt Maley earlier. This is a two month chart you can see. And given the candlesticks, we had a lot of indecision. That's these wicks, as we call them, down in late January. But we are testing that area right now in the S&P 500, the NASDAQ, the Dow, also the NASDAQ 100.

And if these levels break, probably going to see some downside continuation. Most bullish situation is if it's quickly reversed and we put in one of these long tails on one of the daily candles. And it doesn't have to be today or the next day. But that's kind of the signal that we're looking for here.

Also going to check out what's happening with the VIX. And let's take an interest here. And we can see, still hovering under the 30 level right here.

Also taking a look at the bond market. As you noted earlier, the yield curve is contracting here instead of expanding. And that kind of worries the situation with respect to inflation, not only that, but the Fed's reaction. So now we're talking potential recession indicators.

The 2s10s has come down to about 50 basis points. Of course, it has to get down to zero and in negative territory. But it's starting to draw a lot of interest.

And so, so far looking at the sector action today, not surprising to see energy get a little love, also tech and real estate bouncing. Staples to the downside, a positive sign here. But given the structure of the indices, probably going to see a little bit more downside before we see some upside.

JULIE HYMAN: And speaking of technology, by the way, there was an interesting note out today that looked at hedge fund interest, or lack thereof, in technology shares. And it's sort of a mirror, if you will, into what we have been seeing. But nonetheless an interesting indicator, perhaps.

JARED BLIKRE: Yeah, it is. So Goldman Sachs monitors hedge fund positioning. There's a lot of guesswork involved but they do various surveys. And so they've got a pretty good handle on what the Street is actually trading.

And coming into the year, there was already a big unwind in tech. I mean, you look at what happened from mid-November into the end of last year. There was a huge sell off in tech software.

So they came into the year lighter weighted to technology than they were just a couple of months ago. And in fact, now they're the lightest weighted towards tech, the most underweighted in tech, since 2011. So we're talking a 10 year low here. There's been a violent repositioning.

And if we take a look at the YFi Interactive, we can see a lot of green here today. But here's a year to date. And specifically with respect to what they call their VIP list, or VIP hedge fund list, there's still interest in the FAANGs. So Apple, Facebook, well now the Meta, Amazon, Google, called Alphabet, Microsoft, all those are still in favor.

But some have been losing favor, like AMD, Xilinx, which was absorbed by AMD. I didn't see Tesla on that list. But a lot of the stalwart companies have simply left hedge fund favor.

Who's coming in? We've got LNG. That's on the energy side. On the financial side, we've got an interest in Citigroup, and also Charles Schwab, which very recently has been hitting record highs.

And so really interesting to see the the pickup in value and interest in hedge funds. What this tells me is that I'm looking for a major low in the S&P 500 within the next week or two. I think the next pain trade is going to be in favor of growth. And the value and cyclicals, probably going to take a little bit of a whack there.

That's kind of propositioned on the Fed taking a little bit of a slightly less hawkish stance going into that FOMC meeting. But we'll have to see how it all plays out there. That's just one scenario.

- Jared, can I just say, I'm really impressed with that handheld device. Where'd you get that thing? And you're sitting there drawing candlestick charts and wicks down the floor of the for the New York Stock Exchange. Where did you get that thing?

JARED BLIKRE: I'll tell you what, this is an iPad 12. It has 5G connectivity, or maybe it's 4G. Anyway, powers the YFi Interactive here that you see me standing next to in the studio every day. And now I just have a portable version here that I can take along with me. So miracles of technology, right?

- Yeah, indeed. All right, Jared Blikre, thanks so much. We'll check back with you later.