Is Sentient About To Crack
With US treasury yields starting to turn lower, just as the S&P500 hesitate at critical highs, we take a look at the bigger picture to see if sentiment could be about to turn for the worst.
Share this:
With US treasury yields starting to turn lower, just as the S&P500 hesitates at critical highs, we take a look at the bigger picture to see if sentiment could be about to turn for the worst.
Since topping out in late November, the decline invalidated the September ’18 trendline and confirmed a primary trend reversal with a break below 2.8%. Coupled with shallow retracements and strong bearish momentum, the leg from 3.25% appears to be impulsive.
US10Y has tracked broadly sideways Since finding support at 2.54%, although a tighter range between 2.6% - 2.8% became apparent since early February. Yet trend traders could already assume a bearish breakout could be pending, as the decline into the range was bearish and price action within it appears corrective. Moreover, the range remains below the 50, 100 and 200-day eMA’s, all of which are turning lower and in ‘bearish order’.
However, if we zoom in to recent candlestick action on the daily chart, things become the more interesting.
A 2-bar reversal marks a lower high within the range at 2.77%. Furthermore, a bearish engulfing candle closed beneath support yesterday to suggest bearish momentum is trying to break this lower. That this occurs as the S&P500 is struggling to re-test 2816 resistance brings into question whether we could be approaching a bout of risk-off. And perhaps the icing on the cake for bears is that, when adjusted for open interest, VIX traders are net-short at levels not seen since 2016.
So, we’ll continue to see how price action on US10Y and the S&P500 develops, because if they both break lower it assumes a broader bout of risk-off for global markets.
Latest market news
Open an account in minutes
Experience award-winning platforms with fast and secure execution.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
S&P 500 forecast: tech rebound faces CPI test | Technical Tuesday
Monday's tech-led rally suggests last week's AI sell-off was more positioning anxiety than the start of a correction. Today's US CPI report could decide whether the S&P 500 rebound has staying power.
Bond yields and crude call the shots for ASX 200
The ASX 200 has rallied on 93% of occasions this year when Australian three-year bond yields have fallen at least five basis points. With crude prices also plunging, the latest breakout has history on its side.
S&P 500 Forecast: SPX rises despite Nvidia’s decline
U.S. stocks are rising, extending gains from Friday, as oil prices decline and bargain hunters step in, although Nvidia falls amid controversy surrounding CEO Jensen Huang.
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.