Bulls Beware: Bond and Currency Charts Say It's Not a Pretty Picture Outside of Stocks
Treasury yields may flip the bullish switch with a rally into today's close. Shy of that, though, bonds and currencies are telling us that all is not yet well underneath the surface.
Even the action in non-US stocks is disconcerting. The iShares MSCI EAFE Index (NYSEARCA:EFA) and iShares MSCI Emerging Markets Index (NYSEARCA:EEM) funds are obviously struggling to find their footing technically. So outside of the US indices and the Japanese stock market, on what should we be hanging our bullish outlooks? Let's take a look at the largest, most-liquid markets in the world for some truth.
The S&P nears resistance – but the 10-Year T-Note Yield is the key resistance we need to watch!
We're still below the historic range of resistance at 1550 - 1,576.09 for the S&P 500 Index (INDEXSP:.INX). The market is through earnings season and now it's past the monthly employment report here in the US. So is the coast all clear or is this to be looked at as if there's few if any new catalysts for the bulls in the next month or so? Are you a glass half full or a glass half empty type of a person?
Seriously, there are too many cross currents to give either the bulls or the bears the edge on this one. I'll spend some time this weekend on the various arguments and try to present them to you in report form early next week. For now, just know that there is no "all clear" being signaled just yet.
Click to enlarge
Treasury yields have blown through short-term resistance levels this week. The key resistance level that we must watch into today's close is 2.054% on the yield on the 10-year Treasury Note. A close above that level will be technically significant and will likely force more money out of bonds and into stocks. A failure to hold the breakout (currently, TNX is at 2.052% as of 1:50 p.m. EST) could coincide with a turn back to the downside in stocks.
Click to enlarge
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.