A virtual free fall in bonds is fueling a rally in stocks, and possibly gold. The first chart shows the 10-year Treasury Yield ($TNX) surging from 33.25 to 37.25 (3.325% to 3.725%) over the last seven days. The corresponding bond ETF (IEF) has fallen from around 94 to 91 (3%). This is a big move for bonds. Moreover, the proceeds from these sales have to go somewhere.
'The rise in the Gold SPDR (GLD) has certainly been less spectacular than the fall in bonds, but gold is on the rise again nonetheless. GLD broke resistance last week and this breakout held with a successful test at 131. This is the first level to watch for signs of a failure.
The S&P 500 ETF (SPY) is up almost 4% this month with a surge from 127.5 to 132.5. As noted yesterday, this rally is getting frothy and looking like some sort of buying climax. However, the rocket is still pointing up and there are simply no signs of weakness. SPY gapped up the last two Monday's and these gaps are holding. A move below the last gap (131) would provide the first signs of a pullback.
Key Economic Reports:
Wed - Feb 09 - 07:00 - MBA Mortgage Purchase Index
Wed - Feb 09 - 10:30 - Oil Inventories
Wed - Feb 09 - 18:45 – Bernanke Speaks
Thu - Feb 10 - 08:30 - Jobless Claims
Fri - Feb 11 - 09:55 - Michigan Sentiment
Charts of Interest: Tuesday and Thursday in separate post.
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This commentary and charts-of-interest are designed to stimulate thinking. This analysis is not a recommendation to buy, sell, hold or sell short any security (stock ETF or otherwise). We all need to think for ourselves when it comes to trading our own accounts. First, it is the only way to really learn. Second, we are the only ones responsible for our decisions. Think of these charts as food for further analysis. Before making a trade, it is important to have a plan. Plan the trade and trade the plan. Among other things, this includes setting a trigger level, a target area and a stop-loss level. It is also important to plan for three possible price movements: advance, decline or sideways. Have a plan for all three scenarios BEFORE making the trade. Consider possible holding times. And finally, look at overall market conditions and sector/industry performance.
The S&P 500 ETF (SPY) is up almost 4% this month with a surge from 127.5 to 132.5. As noted yesterday, this rally is getting frothy and looking like some sort of buying climax. However, the rocket is still pointing up and there are simply no signs of weakness. SPY gapped up the last two Monday's and these gaps are holding. A move below the last gap (131) would provide the first signs of a pullback.
Key Economic Reports:
Wed - Feb 09 - 07:00 - MBA Mortgage Purchase Index
Wed - Feb 09 - 10:30 - Oil Inventories
Wed - Feb 09 - 18:45 – Bernanke Speaks
Thu - Feb 10 - 08:30 - Jobless Claims
Fri - Feb 11 - 09:55 - Michigan Sentiment
Charts of Interest: Tuesday and Thursday in separate post.
-----------------------------------------------------------------------------
This commentary and charts-of-interest are designed to stimulate thinking. This analysis is not a recommendation to buy, sell, hold or sell short any security (stock ETF or otherwise). We all need to think for ourselves when it comes to trading our own accounts. First, it is the only way to really learn. Second, we are the only ones responsible for our decisions. Think of these charts as food for further analysis. Before making a trade, it is important to have a plan. Plan the trade and trade the plan. Among other things, this includes setting a trigger level, a target area and a stop-loss level. It is also important to plan for three possible price movements: advance, decline or sideways. Have a plan for all three scenarios BEFORE making the trade. Consider possible holding times. And finally, look at overall market conditions and sector/industry performance.
About the author:
Arthur Hill, CMT, is the Chief Technical Strategist at TrendInvestorPro.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London.
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