As shown here, the TNX breakout today happened to coincide with a similar breakout (but to the downside) in SPX to new lows for the year. TNX being over 4.74 should be getting close to an area where this begins to find resistance, but today is a clear breakout of a level hit more than 8 months ago and trends have not shown much sign of stalling too much. My own expectations are that 4.80-4.85 are possible, but TNX should not immediately get over 5.02% which is a very important area for TNX

This morning's Goldilocks Economic report has led Treasury yields to spike yet again and given the recent correlation with Treasuries and Equities, the "Good News is bad news" theme is causing Equities to sell off as thoughts of less Fed action is being priced into the curve. S&P has broken early January lows, while TNX has exceeded last Spring's highs at 4.74%. With regards to SPX, the most likely target lies near 5700-5725 for SPX, or around 100 points lower. Breadth is decidedly negative as might be expected at around 6/1 negative, and the volume is around 2/1 negative, but not nearly as capitulative to think that lows are imminent today- ARMS index, or TRIN is trading.66 and we'll need to see readings nearly at 2 to think that fear is setting in.

Is it right to buy Energy for a bounce? Equal-weighted Energy has trended up sharply over the last couple weeks, but these gains remain part of a lengthy downtrend in the relative picture of Energy to SPX since October 2023. While investors heard reports of possible China-led supply shock events like banning US-sanctioned Tankers from Shandong Port, the entry for most sanctioned Oil which might drive up shipping costs (1.74 million barrels per day from Iran, Russia, and Venezuela in the last year) However, Crude failed to lift in trading and closed down negative. Overall, my feeling is that Energy likely does outperform in Q1 before heading lower, but at current levels, it's likely that Crude, and by extension, Energy might require a "breather" before being able to push higher. This downtrend shown below is a daily chart of Equal-weighted Energy (RYE) in ratio form to the Equal-weighted SPX (RSP -1.03% )

Small-caps have not responded positively to the recent backing up in rates and the last couple days of weakness have suggested a brief move down to new monthly lows might be needed before the Russell 2000 ETF (IWM -2.24% ) gets to support. I'll discuss this in tonights report but it appears still early to thinking this is bottoming