WTI Crude’s breakout should help Energy outperformance Array ( [cookie] => 24A6F9F7-FF1D-48EF-9CEE-67A01E97FA6B [current_usage] => 2 [max_usage] => 2 [current_usage_crypto] => 1 [max_usage_crypto] => 1 [lock] => 1 [message] => [error] => [active_member] => 1 [subscriber] => 0 [role] => fsi_macro [visitor_id] => 593601 [reason] => [method] => ) 1
The near-term technical trend improved even further with SPX’s push back over 4060 in Monday’s trading. This helped to recoup the prior 2/10 lows, and SPX has now recouped more than 50% of the entire decline from early February in a mere three trading days. While this was partially given back as US Treasuries reversed earlier gains, the recent three-day surge has been anything but bearish.
The breakdown of Treasury yields looks to have directly coincided with US Equity index strength on Monday. While many suspected some “squaring of shorts” ahead of Powell’s comments might be the likely reason why yields started to pullback during a time of low supply, rates should be in the process of peaking out, and this early week yield decline looks to be a starting point for the breakdown in momentum in US Treasury yields.
Specifically with regards to SPX, It’s thought that prices very likely could face consolidation post FOMC Chairman Powell’s comments on Tuesday. However, dips should prove temporary and buyable with an area of downside SPX support found at 3980-4005. While short-term trends have turned bullish, consolidation will provide a better risk/reward entry for those looking.
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Thomas J. Lee
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