Highlighting "Fear" In the Bond Market
by Mike Paulenoff
February 28, 2021 • 10:55 AM EST
In it, Mike highlighted the "increasing fear" in the bond market, with longer-term rates projected to continue to rise, and in the "Fear Index" itself, the VIX, suggesting increased risk in the equity markets.
The discussion turned out to be a valuable heads-up to MPTrader members in view of the subsequent dismemberment of the bond market into late last week, when longer-term (10- Year) Yield rapidly backed up to 1.61% from the 1.25% level it was at when Mike first posted his analysis on February 17.
At the same time, the equity markets sold off strongly last week, with the S&P 500 shedding 2.4% and the Nasdaq 100 losing 4.9%.
Mike posted frequent 10-Year YIELD and TLT updates throughout the week, looking for signs of upside exhaustion in Yield and downside exhaustion in the TLT, followed by signs of a countertrend move.
Early Friday morning, Mike wrote:
"Ahead of the trading day, let's address again the elephant in the room, the bond market via my attached 4 hour chart of the TLT, which shows today's pre-market strength into the 140.20 area compared with yesterday's violent, capitulation down-spike to 136.61. During the hours since the spike low, TLT has climbed 2.6%. Let's notice that as of last evening, DSI (Daily Sentiment Index) registered a very bearish and oversold figure of 9, which at the very least is a warning to bond bears that the market could be a bit too comfortable and entrenched on the short side."
What's next for TLT and 10 year Yield? Will the recent behavior of the bond market continue to impact the equity indices?
Join Mike and our members for constant intraday discussion of bond market and index ETFs, individual equities, macro indices and ETFs, commodities, precious metals and miners.
On March 30, with Salesforce.com (CRM) trading at 210.95, Mike Paulenoff wrote MPTrader members:
"The relentless stair-step decline within the Sep.-Mar. down-channel is nearing completion ahead of my expectation of a powerful upleg that revisits and takes out the ATH at 284.87."
Fast-forward to last Thursday afternoon, April 8, when CRM finally received some long-awaited price support from Wall Street.
On March 8th, when XLI was trading at 95.88, this is what Mike Paulenoff discussed with our MPTrader Members about the S&P Industrial SPDR ETF:
"In addition to the XLB (Materials SPDR), another vehicle (arguably a better one) to ride the infrastructure spending narrative, is via the XLI Industrial ETF.
Soliton (SOLY) rallied 37% in the weeks after Mike Paulenoff highlighted it for MPTrader members on March 10. Where's it headed next?
SOLY is a medical device/biotech company developing a promising product, with a 2-year chart setup that caught Mike's attention early in the year, suggesting sooner than later that price would reflect the underlying company fundamentals.
Early on March 10, with the stock at 13.
On Monday morning March 1, Mike Paulenoff alerted MPTrader members to a potential up-move in U.S. Steel (X):
"If an infrastructure plan really is doable early in the Biden Administration, and if the 440% upmove from the March 2020 low to the Jan. 2021 high has not discounted just about every conceivable growth scenario, then X is turning up into another upleg as we speak. As long as any forthcoming weakness is contained in the 16.40 to 15.
A biotech name closely monitored in our discussion room at MPTrader and that has been on Mike's radar since the stock's explosive upmove during the height of the Covid vaccine and therapeutic drug hype last July-August is Sorrento Therapeutics (SRNE).
Mike frequently discusses the technical set up in SRNE overlaid on related company news about developmental drugs in its pipeline, and its sizable and significant short position.
