Have you noticed how dull the links have become? Every day after the close, I note the performance of the different bonds: five years, 10 years, etc. It occurred to me that no one is talking about bonds anymore probably because the yield barely changes from day to day.
I’m looking at the 10-year Treasury yield graph, and, you may remember, I thought we would see a 0.6% rebound from that level and resistance at 0.75% would be difficult to cross. But I really didn’t think that we would go from the wild oscillations we saw in February and March to literally no interest in April and May.
I know the graph indicates that we should be above that level by 0.75%. Why does that say that? Because since late April, there has been a series of higher lows and highs. However, my inclination is that we are more likely to see bonds recover and yields fall.
I also find myself consulting the graph of the iShares MSCI (EWH) fund for the Hong Kong market. I know it seemed like new Thursday, but the shape of the EWH chart is similar to that of returns since April. More than most markets, EWH has had a perfect rectangle in place for seven weeks. So if investors decide to panic outside Hong Kong, and therefore the weaker resistance breaks, it is possible that our bond yields may also decline.
I think this should be watched closely.
Far from it, little has changed during Thursday’s decline. The indicators have barely changed. Of course, the range was good – it remained stable for the day – but the cumulative advance / decline line is still at a lower level. The McClellan summation index is still faltering, although it is rising.
The number of stocks making new highs has not increased, but the number of new lows has not increased either.
The only thing that has changed slightly is that the American Association of Individual Investors saw the weekly survey up five points among the bulls and they came almost directly from the bear camp. The put / call ratio rose a little on Thursday to 86%, the highest reading in a week, but the 10-day moving average remains weak.
In fact, the 10-day moving average of the stock sales-to-sales ratio is approaching the levels last seen in January 2018 and June 2018, so it’s hard to say that people are woefully bearish on stocks. Yes, I know there are indicators that do not show that people are optimistic, but this is not one of them.
In my opinion, there is not enough weakness in the indicators to be terribly bearish, but there is not enough strength to be bullish either. That’s why I think we continue to roll on roasters. We continue to rally and we tire quickly and we sell and we tire quickly. But at the moment, it was the calm of the bond market that caught my attention.
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