I'm becoming more convinced that this sell off was triggered by yield/rate concerns as many of us (and others) suspected. I was skeptical of this thesis earlier in the week as this rising rate environment has been telegraphed for some time, however watching the action last night, i'm becoming much more confident in this thesis - see notes in the last chart.
Top down.
Monthly dating back to 82. Generational bull market, about to be tested. We've been watching this level for at least 12-18 months and it's now make or break.
View attachment 960403
Weekly: Two Large patterns projecting to slice through that monthly channel. Both broken (only one confirmed), along with the LT support line around 121.5.
View attachment 960406
Daily: A closer look at that break and note smaller H&S pattern played out perfectly, catching the break below the major support.
View attachment 960415
Hourly vs Dow
View attachment 960424
In a nutshell, we need to see this action change dramatically and a few key levels re-captured soon, or equity markets could be in serious trouble.
Additionally for gold bugs, I posed the idea last year that if that monthly line breaks we could see a final wash out in gold, before it reverts to an inflation trade again (ie great time to buy during that washout). That was because gold was tracking in lockstep with the long dates bonds. Since Nov 2017 that relationship has diverged. Right now the gold market seems very confused. It's being influenced by rates, USD, equity outflows etc. The takeaway for me, is that we will simply need to be nimble for now until the broader direction becomes clear.... but with a long term view, I'm extremely bullish.
(20min delay)