10-year U.S. Treasury yield surges above 1.50% as Powell says he’s monitoring bond market
Let’s hope he is as apparently the rise in the ten-year rate since the beginning of January is the fastest in 50 years. Shame he doesn’t keep a simple little chart of ten-year bond yields and then he “might” have seen this coming. Always amazes me when people in such positions are surprised when it was all there in front of everyone to see.
But the most amazing move over the past week has been the S&P. I mentioned a few weeks ago that this index might be going to form a large diamond pattern. So far it is perfect for this to be the final outcome. Diamonds can be continuation patterns but mostly they are major reversal patterns so we need to be aware of the ramifications if this pattern continues to play out.
The whole world can see the head and shoulders top in the NASDAQ Comp – patterns that everyone can see always bother me a bit but it will make it hard for this index to get back above all the overhead resistance that now exists. If it just rallies and then turns down, this head and shoulders pattern will probably play out. Has retraced all trading for this year.
I mentioned last week that the Russell 2000 (RUT) couldn’t even afford to take a breath or it would break its uptrend. Poor thing did and had a sharp fall as a result. Has all happened a bit quickly on this sector to know for sure whether it has topped.
But one thing to keep in mind – my Geniuses are already back to 65% invested. Remember at the top they were leveraged long so being at 65% means they have some handy cash on the sidelines again. If stocks rally, they will be hell bent on getting back in again.
Still fretting over the US dollar chart. Plain to see now why I have been spending so much time on this one chart when we have had more evidence this week again regarding how much damage a stronger dollar can do to commodities. It has broken its downtrend but will run into stiff resistance once it gets to 93. I think this week perhaps we need to follow the yuan. It has had a huge move up over the last year against the US dollar having gone from 1.39 to 1.57. Might not sound much but it is huge in currency terms. Friday the yuan broke down out of a two moth sideways move so interested how it goes from here.
It wasn’t just the US fed getting concerned over the rise in ten-year yields – our own Reserve Bank also had a panic attack and will now be buying double the bonds program to halt the rise in yields. Our ten-year rate is siting at 1.82% compared to 1.90% last week so they haven’t achieved much despite their extra effort. Must be some pretty worried people around in Canberra. And of course this continues to allow the banks to keep their margins so that they are once more leading in the market. Banks hate falling rates but rising ones….
I am thoroughly tired of the pattern on the hourly chart of the XJO – we are now getting on towards four months that this blessed thing has been creeping across the page in this elongated pattern. It broke below the lower boundary the previous week and then spent all last week gasping around the lower boundary. I wish it would do one thing or the other – break down properly or break topside. I suppose it is a bit encouraging that we haven’t collapsed in light of the sharp falls overseas.
One encouraging point from where I sit – I am finally getting the correction in the XSR which was the second of my two charts for the year. I had hoped to see it do a bit of work between 2800 and 2900 – Friday it was 2896 (so just into this range!!) but some more work down here in this area would give this index something to build on if we were to see the bull market in this sector continue through 2021.
I seem to be saying each week that it is another crucial week coming up but it continues to be the case.
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