As 10yr yield falls, so will markets - look for swing puts
Study these 30min charts and you can see that with few exceptions (ovals), U.S. markets are moving in same direction as yield. I am using futures charts as proxy to SPY, DIA, and QQQ so the trading hours match up with the yield.
The yellow ovals show when markets went down as yield moved over 2.00. That fear reaction was short-lived. Note how markets sold off Friday afternoon as yield continued lower. If markets always moved inversely to yield then they should have celebrated and closed much higher last week.
The white ovals show how markets responded when yield moved from 1.95 to 2.00. It was temporary though, and even as yield made a big move over 2.00 today (long green candle) the futures rose in tandem.
As I write this, markets are skittish in following the yield. On the weekly chart of US10Y you can see 1.95% as an upper limit, but that did not hold and yield has pushed higher. Now this may be temporary as the Fed makes changes. And just now as the yield went below 2.03, futures went lower as well, but they are undecided on direction until yield gives a lead.
If I am wrong, swing puts will be exited. Up here is a good place to start some positions with nearby stops and lower risk. If I am correct, there is a good bit of downside that still may come, so for me the potential reward to risk is very good.
The yellow ovals show when markets went down as yield moved over 2.00. That fear reaction was short-lived. Note how markets sold off Friday afternoon as yield continued lower. If markets always moved inversely to yield then they should have celebrated and closed much higher last week.
The white ovals show how markets responded when yield moved from 1.95 to 2.00. It was temporary though, and even as yield made a big move over 2.00 today (long green candle) the futures rose in tandem.
As I write this, markets are skittish in following the yield. On the weekly chart of US10Y you can see 1.95% as an upper limit, but that did not hold and yield has pushed higher. Now this may be temporary as the Fed makes changes. And just now as the yield went below 2.03, futures went lower as well, but they are undecided on direction until yield gives a lead.
If I am wrong, swing puts will be exited. Up here is a good place to start some positions with nearby stops and lower risk. If I am correct, there is a good bit of downside that still may come, so for me the potential reward to risk is very good.
