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Yields

Risk is high for tech stocks and goldThe Nasdaq is looking like it may test its support line soon. The index has been responding very negatively to any whiff of rising interest rates (falling prices) on bonds. Bond rates fell (and prices rose) for five weeks straight, but then they hit the 200-day EMA like a brick wall, broke their trend, and have been trading sideways the last two weeks. This week it's looking like yields might resume their uptrend again. Here is an ETF of long-term government bonds, so you can see what I mean about the 200-day EMA resistance and the risk of a rollover: If this falls, expect the Nasdaq to fall through its support line and perhaps to head downward to its 200-day EMA. Gold will drop as well. Note that gold has already perfectly hit the target I posted two months ago, and now looks ready for a pullback from resistance: Similarly, the USD is at a support level after a six-week slide: The market has a couple different ways to price in inflation. It can either sell the dollar (and buy gold and bonds), or it can sell gold and bonds (and buy the dollar). (If inflation gets really bad, the market could sell both bonds and the dollar at once. If that happens, it might be okay for gold and crypto but could be really bad for US stocks.) Right now we're alternating between these two tools. If the dollar finds support and gold finds resistance here, then the market will rotate to selling bonds, and yields will go up. That's consistent with the price action we're seeing in $TLT, with its rejection from the 200-day EMA. Bottom line: we might be poised at a negative inflection point right now for gold and tech stocks.
NASDAQ:QQQShort
by ChristopherCarrollSmith
9
Yields & Sector RotationI put this template together to track sector rotations based upon yield changes. Since August 2021 rates have incrementally risen on the 5,10, & 30 year treasuries (top pane). This provides support for value outperforming growth (second pane), illustrated by the Russell 1000 Value ETF outperforming the Russell 1000 Growth ETF. Finally, to visualize this effect on the sector front and aid in portfolio allocation in the future I show the top 2 value sectors (financials and industrials, traditionally) and the top 2 growth sectors (tech and healthcare, traditionally).Enjoy! @LamontyTrades on Twitter
TVC:US10YLong
by Vol_to_Valuation
1
GDX higher , can VOX Royalty benefitIn 2021 Vox set out ambitious corporate targets for the year with an aim to grow and acquire additional NAV-accretive royalties. By February Vox Royalty announced that it had agreed to acquire a Western Australian gold royalty portfolio from Gibb River Diamonds Ltd for A$325,000 in cash. With a total of 31 Australian royalties, Vox is now the second-largest publicly traded holder of royalty interests in Australia by royalty count, behind Franco Nevada Corporation.    Vox's gold royalty portfolio includes three advanced exploration gold royalties in Western Australia. The royalties include a 1% Net Smelter Return (NSR) royalty over the Bulgera Gold project operated by Norwest Mineral Ltd, a 1% NSR over the Comet Gold Project operated by Accelerate Resources Ltd, and a 1% NSR over the Mount Monger Gold Project operated by Accelerate and subject to a binding option agreement with Mt Monger Minerals Pty Ltd. The Bulgera Gold deposit has an estimated resource of 93,880 gold ounces at 1.0 g/t. With precious metals miners showing a positive reaction to the US10 year yields being capped under 1.7% currently, plus the weakening US dollar there is a real chance that producers ramp up production as prices of the yellow metal appreciate. $2k Gold seems to be the sweet spot for a lot of evaluations around the miners but there is sentiment building that the economy and monetary policy are going to be very supportive of traditional stores of wealth.
V
by TH_Analysis
XAUUSD - Gold - GLD analysisXAUUSD is moving higher on the back of the weakening US dollar. However, into the end of trading Friday, the US10 year yields started to rise, as traders sold Bonds and bought equities. The rising yields will keep the price of Gold capped, so during next week it is crucial that Bonds get bought, the US dollar gets continually sold, and that we get XAUUSD above 1850. Otherwise, the 3rd test of the descending trend line will be the first roadblock and Gold will come back into the $1700-$1800 trading range. There is also a double bottom now at $1680-$1690 so a good target for anyone looking to take liquidity. Targets to the upside include a measured move to $2250 US yields are key for the direction of gold as is the continuation of a weaker US dollar.
FX:XAUUSD
by TH_Analysis
Are bonds ready for a bounce?Bond have fallen a lot and quite fast. The sentiment is really stretched and most expect yields to rise more (bonds to fall lower). In my opinion there is quite a decent chance the bond bull market is over given that we had a massive blow off top in March 2020, but this doesn't mean that I don't see a potential bounce here or even bottom. Bonds hit key support, swept the lows before the big move up and are no showing signs of life. When I see so much debt, when I see slow growth and all the bad things going on around us... I don't think we'll get huge inflation any time soon. To me this is cyclical inflation after a supply shock rather than anything else. Many other yields are decreasing and spreads are the tightest they've been in years, so why would bonds go much lower? The Fed has failed to meet its inflation target for years, but they are going to make it now? We are also post the SLR cliff that could had been the 'sell the rumour buy the news event'
CBOT:UB1!Long
by BitcoinMacro
Inflation looks hot! Get ready to short tech if bonds break downWatch for bond breakdown as a Nasdaq sell signal Early this year, the Nasdaq had its weakest run in a long time as interest rates rose (and prices fell) on the 10-year US bond. (Note that bond rates and bond prices move in opposite directions.) Both tech and 10-year bonds have rallied a bit since March, but amid heightened inflation expectations this week, I've been watching like a hawk for interest rates to begin rising (and bonds to begin falling) once again. I'd expect to see tech begin another large correction should bonds fall through their uptrend support line, which they're testing right now: Signs that inflation is about to get hot: 1) Bloomberg and Arbor Data Science report more than 50% odds that headline CPI exceeds +2.5% year-over-year. That's the highest those odds have been in a long time. 2) Commodities like lumber and corn and copper continue to roar. Save your unpopped popcorn kernels, because corn futures are starting to look like a Tesla or Bitcoin chart: 3) According to Bank of America, "The number of mentions of ‘inflation’ during earnings calls also rose sharply, more than tripling YoY per company so far, the biggest jump in our history since 2004." According to CBS News, Procter & Gamble says it will raise prices in September. Other companies discussing price hikes include Kimberly Clark, Owens Corning, Mohawk Industries, Shake Shack, and McKesson. It's hard to deny that inflation is coming when companies are explicitly telling us that they will raise prices. Signs that rate hikes are coming as well: 1) Rates are rising all over the world, not only in developing nations like Turkey, but also in developed nations like Russia. Rising rates signal that inflation is expected, and rising rates abroad put some competitive pressure on US rates to rise as well. 2) U.S. economists think the Fed will start tapering monthly bond purchases later this year, earlier than they previously thought. In other words, to control inflation, the Fed may end its policy of "soft yield curve control." Financial conditions drive markets We've just lived through an unprecedented bull market due to never-before-seen loose financial conditions. However, the bonanza may soon be over if inflation and interest rates heat up. Tightening financial conditions could lead to not just a sharp Nasdaq correction, but perhaps even a prolonged bear market if they last a few years. With the Nasdaq poised near an all-time high and bonds right on the verge of breaking down, having slightly violated their support line today, I think at minimum I'll hedge with a Nasdaq put. Note the double top that may be forming in Nasdaq here. Disclaimer: not financial advice.
NASDAQ:QQQShort
by ChristopherCarrollSmith
19
$TNX Direction & Dot-Plot summaryTechnical Analysis Technically speaking, 1.6% had been a very important level, as we tested 6 times, before continuing higher. Now the 10sma which has been working very well year-to-date, is lining up with the 1.6% level. I expect some selling to reach the 10sma at 1.6%, for a bounce to 2%. Dot Plot Summary 7/18 FOMC officials are predicting higher short-term interest rates by the end of 2023, as compared to 5/17 at the December meeting (i.e., a growing percentage who see an earlier start for rate hikes). Notably, four officials now expect a rate hike at some point next year.
TVC:TNXLong
by dorfmanmaster
2% yield is coming--soonHello everyone, I drew this pattern a few days ago when analyzing the SP500 behavior in recent weeks. I believe the market boogeyman is not gone and that today was just a taste of what he has in store. 2% yield will not be in July. It will be here in April or June... and as early as March 29th. The yields are behaving extremely bullish lately. The blue lines represent an ascending channel that is consolidating at higher lows. In the past few days you can see that the pattern is returning to the center of this channel less and less. It's breaking out of the channel to former a sharper one. So we've got increasing curvature. I believe the yields have a strong possibility of going parabolic unless the fed takes control. Given JPOWs speech, he is going to be reactionary and not prevent it. So it's definitely in the realm of possible and trending towards it. I believe this could have severe implications for the equities market. I've drawn a purple 2% yield line which is being eyed by the market as a whole as a possible 'catalyst' for a 20% correction. At 2%, the yield allows the bonds to break even by surpassing what JPOW says is inflation. The bond market is not believing JPOW and the Fed. They seem to believe inflation is over 3% and as high as 4%. They also seem to believe that it is not transitory. The yield is also becoming suspicious. I believe there are a number of short sellers hitting the US10Y in an effort to push the fed to raise rates. I have no proof. Only a gut feeling based on observed price action. Be careful. A parabolic yield could induce a panic leading to a possible limit down on the NASDAQ/SP500. You're welcome to view my forecast I made on March 12th. We are seeing some deviation but the overall pattern remains. If I am trading right now I would be in cash or in puts. Please trade carefully. The market may experience extreme volatility as the TINA effect weakens. (There Is No Alternative -- meaning stocks have the best return possible and there is no competition) Disclaimer: I am holding puts and have been for a few days. I am not a financial expert or advisor. Trade at your own risk.
TVC:US10YShort
by tay_tay86
End of volatility? Yields continue to rise. Spy could crack.Hello. Despite this weeks amazing rally, I believe it's too much too soon. The yields are continuing to rise and could be as high as 1.7% by late Monday/Tuesday. How could it affect the market? Some economists are predicting that a 2% yield on the 10 Year will result in a 20% correction in stocks. This is in line with the bearish megaphone that has formed. There's a possibility that we are approaching a peak. The rejection could take us quite close to the economists warning of -20%. 350 could happen which is around a 18% correction. What do you think? Leave your comment below. I believe we have 1 more dip before truly breaking out of this. For now, I remain short and will load more puts should we try to push past 395 to reach 400. At 400, I will go all in on puts. Currently holding puts for 390 strike by friday. A circulating idea has been that we will have >2% yield by June. Trade at your own risk.
AMEX:SPYShort
by tay_tay86
6
7 MOST IMPORTANT CHARTS TO WATCH RIGHT NOW1. VIX is filling the gap from when the Feb-Mar crash begun. Volatility is getting supressed when things actually look very fragile with Central Banks having nothing under control. A VIX spike (big move down for stocks) wouldn't be a surprise here for reasons I'll explain soon. 2. DXY looking strong here. The 50 DMA has turned up and dollar strength could be a problem here. Watching other charts tells me things are OK, so the weakness comes from specific currencies. Some currencies are doing very well while others very poorly and there is no concrete way to go about it. 3. CNH/CNY however are very clear as to what is going on. They seem to be in agreement with the DXY. The relentless USD downtrend has been broken and the USD is showing signs of life. Despite the QE, despite the massive stimulus... the USD hasn't gone down. That's not a great sign. Sure most currencies are getting devalued, but if the USD is so strong and could begin an uptrend we have a problem... 4. Essentially most of that is attributed to US long term rates going up faster than anywhere else. This could be happening for many reasons, right or wrong. Inflation might be here, inflation might be coming... but it depends on which country you are looking at and in what form you are seeing it. Is it because of supply shocks (i.e low Oil and Copper production), currency debasement, loss of faith in the currency or trade wars etc? It could be many combined, but when we see bonds go down it could the fact that we have a lot of supply coming in and not enough demand. Maybe we had such a big bull market that people are taking profit. However the impact this has on the market is on many different levels and it comes down to how the market is structured, stock valuation models, different investment strategies and so on. So the more yields go up (bonds down), the bigger the problem becomes if it is relentless. 5. Gold has been going down because real yields have been going up and people have been taking more risk. Why hold gold and not other more useful commodities or riskier assets in general? Gold going up isn't a good thing. It means something is not going well. Over the last few days Gold didn't go down along with bonds, which is worrying. It is stuck between and uptrend and a downtrend, however it is clear it is currently in a downtrend as it is below all key MAs (50-200-300 DMAs). 6. Oil has had a massive rally and I can't tell whether it is over for now but it could be. Very high oil prices in the current environment wouldn't be ideal, but hopefully because more oil is being produced, not because demand is down. Low oil demand means low growth and bad things in general going on. High oil demand means growth and go things going on. Oil got above the 2019 highs, swept them, retested them and went down quite a bit. It also crossed above the big diagonal downtrend from the 2008 high all the way down here and then came back down. If it closes like this and goes lower, I can't rule out 52$ or even 42$, but if it starts going above 68 it could quickly accelerate higher. 7. RUA is the index that has the top 3000 US stocks, spot. It is just an index and doesn't track futures but spot, so it isn't open 24/5. Stocks are still in an uptrend, which Japanese and European stocks showing quite a bit of strength. We've seen quite a few US stocks do well, but if the top US stocks struggle because of higher rates... there could be a big problem. If bonds start selling off hard, the borrowing costs for many companies will skyrocket. That is clearly a massive issue right now. So is a 20% like the one we had in 2018 possible? Yes it is. Do I think stocks could still go parabolic? Of course, but it might take some extra time to get there. We need bigger actions from central banks and eventually bonds slowing down and go up slowly. For now we could get another 5-10% correction, test the trendline and go higher. Until I see the market close below I think up is more likely, although I am more cautious.
by BitcoinMacro