ES Pops On Confluence Of Factors; What's Ahead For Longer-Term Yield?

ES and 10-Year YIELD:

ES has popped higher in reaction to a confluence of positive factors from TSM's (Taiwan Semiconductor) powerful quarterly report that has put a fire under the semiconductor stocks, stronger-than-expected economic data, and a European Central Bank rate CUT (perpetuating the underlying "liquidity injection effort" by global central banks). My attached Big Picture ES Chart shows the powerful Green Candle that has surged the index to another new ATH at 5927.25, in route to my next optimal intermediate-term upside Target Window of 5980 to 6000. Only a sudden downside reversal that presses and CLOSES below initial support lodged between 5848 and 5866 will compromise the current trajectory to the 6000 area... Last is 5917.50...

The 10-year YIELD has jumped from 4.02% to 4.08% in reaction to the relatively strong macroeconomic data and because the Bond Vigilantes are sensing renewed inflationary prospects if the economy remains robust and the central banks continue to add liquidity to the system. 

In any event, my pattern work from the 9/17/24 low YIELD print of 3.60% into the past week's high-zone from 4.00% to 4.12% (10/10/24) exhibits "disturbingly" bullish form that not only argues for higher benchmark rates ahead, but also indicates that the entire corrective process from the October 2023 high at 5.00% ENDED at the 3.60% low in mid-September 2024.

If my work is reasonably accurate, it means that longer-term YIELD is in the initial phase of a new upleg within the dominant YIELD Bull Market that started at the March 2020 Pandemic Low of 0.40%

From a nearer-term perspective, if the four-week upmove off of the 3.60% low climbs to a new high above 4.12% toward my next optimal near-term target zone of 4.22% to 4.27%, my pattern work will confirm that 10-year YIELD is warning us that it is in the grasp of a new intermediate-term bull run that points to a minimum upside Target Window of 5.25% to 5.35%. 

Should such a scenario emerge, then anyone looking to lock in a lower YIELD (i.e., for a mortgage) will have one more opportunity to do so in a correction of the current upleg (3.60% to 4.25%) that my pattern work anticipates will press into the 3.90% support area prior to the next upleg... Last in YIELD is 4.08%


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Veteran Wall Street analyst and financial author, Mike provides detailed and timely analysis and trade set-ups on a range of markets. Read more...

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