Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Rise in Treasury Yields Could Benefit Stocks, though Flight to Commodities Continues

Stock-Markets / Financial Markets Jul 12, 2008 - 08:55 AM GMT

By: Mike_Paulenoff

Stock-Markets

Best Financial Markets Analysis ArticleInteresting that the TLT's (Lehman 20 year T-bond ETF) fell 1.4% on Friday, which reflects a climb in 10-year T-note yields to 3.94% from 3.83% earlier on Friday. Yet the stock indices continued to undergo waves of intense long liquidation.

My guess: that the reversal in the TLTs -- normally an instrument that attracts buyers during times of financial panic and flight to safety -- is hinting that the current phase of the plunge in stocks is nearing completion. The problem is that it could last into Monday or Tuesday, so no sense in standing in front of this falling sword.


While we have reasons to expect an upside reversal in equities, looking at the daily S&P 500 chart we see that until the SPX can sustain a rally that hurdles a prior rally peak, all bets are off. Entering Mondays trading, the climb above 1258 is to get initial traction on the long side, while a climb that sustains above 1278 is needed to confirm a meaningful, tradable low.

It's possible that although the vast majority of the time when Treasury prices decline money shifts into equities, perhaps this time is different. Maybe longer-term Treasuries are being sold down hard because global investors are concerned that the dollar is about to really implode -- and could go into a free-fall type of move. Certainly, fear of such a prospect would prompt big holders of dollars to unload the currency -- and dollar-denominated assets.

Or perhaps we have finally reached that part of the disaster scenario when foreign governments start to bail out of some of their substantial holdings of US Treasury paper. No wonder gold prices are rallying... and could just be starting a move that mirrors a plunge in the dollar.

Whatever is causing the rally in gold, my near and intermediate term pattern and momentum work looking at the daily spot gold chart indicates that the budding upside breakout in spot gold is heading for an initial target of $965 on the way to $1002 thereafter. Any pullback should find very substantial support at $944-$939 prior to another upleg.

The other surging commodity, of course, is oil. Looking at the daily chart of the nearest futures contract on crude oil, until Thursday at about 2:30 pm Eastern, the developing near-term pattern in crude oil exhibited potentially corrective form -- a tight, 3-session consolidation at the low end of a decline from $145.85 to $135.14.

However, once the rally within the coil climbed above $139, all heck broke loose, and continued on Friday into new all-time high territory near $147 (the chart, which goes only through Fri am, shows a high of $145.98). At this point I have to believe that nearby oil ended a correction at $135.14 on Tuesday and has started a new upleg that projects to $147-$149, and then possibly to $155-$160.

Only a decline that breaks below $141 will begin to compromise the current upmove.

Sign up for a free 15-day trial to Mike's ETF Trading Diary today.

By Mike Paulenoff

Mike Paulenoff is author of the MPTrader.com (www.mptrader.com) , a real-time diary of Mike Paulenoff's trading ideas and technical chart analysis of Exchange Traded Funds (ETFs) that track equity indices, metals, energy commodities, currencies, Treasuries, and other markets. It is for traders with a 3-30 day time horizon, who use the service for guidance on both specific trades as well as general market direction

© 2002-2007 MPTrader.com, an AdviceTrade publication.  All rights reserved. Any publication, distribution, retransmission or reproduction of information or data contained on this Web site without written consent from MPTrader is prohibited. See our disclaimer.

Mike Paulenoff Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in