The Dow's weakest link

Earlier I mentioned that industrial stocks were among those hardest hit by recent selling pressure.  Some of the individual components of the Dow 30 index are among those that have the weakest looking charts.  

One such example is Procter & Gamble Co. (PG), which we discussed in the Aug. 30 report.  On that day PG experienced a mini “flash crash” in which a flurry of about 175 trades, executed on the NYSE within a one-second period, caused the decline, with about 244,000 shares changing hands on the Big Board.  Here’s what the daily chart for PG looks like as of Friday, Sept. 27.

With PG in such a vulnerable position below its 15-day moving average and barely above its 3-month low, a move decisively below the 77.00 level from here could catalyze another sell-off in this Dow component and lead to a re-test of the Aug. 30 intraday low of 73.61.  This would in turn weigh heavily against the Dow and could produce the October weakness alluded to as we approach the next interim cycle bottom. [Excerpted from the Sept. 27 issue of Momentum Strategies Report]

The invisible ruler of the Federal Reserve

The woes for many individual stocks began in August with the Fed’s intimation that the central bank would start “tapering” its $85 billion/month asset purchase program in September.  The warning turned out to be a “head fake” since the Fed kept the rate of purchases intact, but the cat was already out of the bag.  As we talked about in a previous commentary, the Fed’s threat to decrease the level of stimulus was tantamount to actually doing so.  Investors reacted by selling bonds and interest rate-sensitive stocks and the mortgage market felt the sting.  Tight money, in other words, became a reality as soon as certain Fed members started voicing their future intentions.

The question now becomes one of how much longer the Fed can keep the inevitable at bay.  Sooner or later they’ll be forced to scale back on bond buying and its hand will eventually be forced by the direction of short-term Treasury rates.   A colleague recently shares an insight with me concerning the Fed Funds Rate (FFR) and 3-month Treasury rates that’s worth repeating: 

“I’ve been thinking lately that Fed policy is like the Wizard of Oz on the big screen. Many believe in it and perception has become reality to an extent.  For one, the Fed Funds Rate is never raised in early stages of the bull is it?  Hmm, so they wait till the bull is rolling over and/or rates are rising (like the 3-month rate which the FFR absolutely HAS to follow – think this through!).  Then the Fed gets blamed for the downturn which raises the Fed’s power in the minds of the people.  That’s mental conditioning if you ask me.”

Indeed, the invisible ruler of the Federal Reserve is the market’s future expectations of inflation.  We saw this in 2004 when the 3-month Treasury yield began rising at the start of the year.  Then Fed Chairman Greenspan was forced to follow suit a few months later by raising the Fed Funds Rate, a trend which continued for the next three years and which contributed to the credit crisis.

We’re still likely a long way from when the 3-month Treasury yield begins rising enough to force the Fed to raise the FFR, but even so the consequences of an unsettled stock and bond market due to uncertainty over the Fed’s next move will provide more than enough headaches for investors.  

Workers vs. producers: action and reaction

The growing disparity between workers’ wages and corporate profits is a perfect example of the Rule of Alternation in action.  Briefly stated, the Rule of Alternation states that for every action there’s an equal and opposite reaction, i.e. the pendulum swings both ways.

From the World War II era until the 1980s, workers were in the ascendant and benefited from rising wages during these decades.  Labor unions enjoyed unparalleled political power and were a contributor to those rising wages.  Unfortunately, the unions pushed too hard and were responsible in large measure for the de-industrialization trend that took shape in the ‘70s and ‘80s as corporations sought to escape onerous levels of taxation and wage hikes by moving to lower-cost countries such as Mexico and China. 

Since the 1980s, corporate profits have experienced a parabolic growth trend while wages have continued to decline.  What this shows is that when an entity, in this case workers/unions, push too hard, sooner or later the opposition pushes back with equal or greater force. 

There’s also something of the Kress cycles involved in this long-term pendulum shift.  The new 60-year inflationary cycle which began in 1954 onward favored the rise of the working class since it fostered rising wages and was supportive of America’s (at the time) vibrant industrial economy.  The peak of the 60-year cycle and the corresponding peak of inflation in the early 1980s saw the shift back in favor of corporations as wages began declining adjusted for inflation and interest rates started receding. 

Now that the pendulum is swinging decisively in favor of producers, how much longer can we expect this trend to continue?  There are no definite answers to this question, but remember that part and parcel of the Rule of Alternation is that “every trend sooner or later evokes its own reversal.”  At some point the worker/producer equation will once again favor workers. 

Potential support for Treasury yields

Another important index worth monitoring in the next few weeks as we enter the potentially treacherous month of October is the 10-Year Treasury Yield Index (TNX).  Long-term Treasury yields have risen to almost 3% in recent weeks in the wake of the Fed’s public discussions about “tapering” QE3 and withdrawing stimulus.  This caused a major spike in interest rates, which in turn catalyzed a slump in mortgage and home buying activity recently.  A lot is riding on the bond market and the economy can ill afford another major interest rate spike. 

The run-up in the 10-year yield index is one reason why the Fed decided to hold off on tapering QE at its latest policy meeting.  The cat is out of the bag, however, and investors are still fretting about the coming end of easy money and artificially low interest rates.  (This is one reason why the stock market didn’t follow through with last week’s post-FOMC rally, but instead has spent the last three trading sessions giving back all the previous gains from the Fed meeting day).

Let’s watch for potential support in the coming days as TNX approaches the 25.50-26.00 area (below).  The technically important 90-day moving average intersects this area and looks like it could provide support should TNX drop to this area.  A lateral trading band with parameters at roughly the 25.50-26.00 area on the low end and 29.50-30.00 on the high end is a strong possibility in the coming weeks.  [Excerpted from the Sept. 23 issue of Momentum Strategies Report]

Apple in the balance

It’s not my normal practice to comment on the action of individual stocks in this section of the report, but I found it interesting that billionaire investor Carl Icahn told CNBC today that he purchased “quite a bit” of Apple (AAPL) shares after the stock’s heavy sell-off.  Shares of the tech giant fell over 5% after Wall Street was disappointed with the company’s pricing of its latest iPhone.  Icahn said that loading up on Apple shares was a “no brainer” because they’re “extremely cheap” and are one of the “best brands.” 

What’s significant about AAPL is that Icahn’s high-profile bullish comment occurred just as the stock tested the widely watched 50-day moving average (see chart below).  While the 50-day MA doesn’t figure as prominently in my moving average methodology as does the 60-day MA, it’s nonetheless a significant trend line by virtue of its being widely used among hedge fund managers.  

The 50-day MA is also heavily incorporated into the computer algorithms of high frequent trading operations.  It would not surprise then to see Icahn’s bullish near-term forecast on APPL prove to be self-fulfilling. [Excerpted from the Sept. 11 issue of Momentum Strategies Report]

A new high in the NEI

If you noticed a lot of people at restaurants and shopping outlets this weekend, it’s because consumers are feeling especially frisky right now.  The New Economy Index (NEI), a reflection of the real-time state of the U.S. retail economy, hit a new all-time high on Friday, Sept. 20.  This partly reflects the influence of the Fed’s recent decision to leave its $85 billion/month monetary stimulus intact.

As long-time readers of this column are aware, until NEI confirms a “sell” signal the overall trend of retail spending is considered to be up.  The last time NEI gave a “sell” signal was in early 2010, which proved to be a temporary blip in the long-term recover that started in 2009.

A reader asks, “How did you go about selecting stocks for your New Economy Index? Why didn’t you include Apple Inc., which is a highly innovative company involved in new technology and over the years grew rapidly to become the highest valued company in the world by September 2012?  Since then Apple’s share price has collapsed so it is fortuitous that it isn’t in your New Economy Index.  Blackberry is another New Economy stock that once flew high but has since fallen on hard times.  Manifestly stock selection is critical in the New Economy Index.”

Answer:  I used the following criteria for selecting NEI components back in 2007:

1.) Must be a company which provides retail employment for millions of Americans (e.g. WalMart), or else a company which reflects the overall employment outlook (e.g. Monster).

2.) Must be a company which adequately reflects consumer spending patterns at traditional "bricks and mortar" outlets (e.g. WalMart), as well as via the Internet (e.g. Amazon).

3.) Must be a company that reflects near-term shifts in consumer spending as well as be a barometer for the small- or home-based business community (e.g. eBay). 

4.) Must be a company which is an excellent representation of the transportation sector as it pertains to the shipment of business products, parcels, documents, etc. (e.g. FedEx).

I briefly considered including Apple in the index, but then I realized that Apple is only a small overall slice of the retail economy since it represents a rather narrow industry, namely personal computers.  That's not broad enough to merit inclusion in the NEI.  The other companies in the NEI are much more diversified and provide a greater range of services, as well as leaving a bigger footprint in the overall economy. 

Even though it has been seven years since the New Economy Index was devised, I don't think it could have been constructed any simpler without losing its effectiveness as an economic indicator.  It still provides a good overall view of the real-time state of the U.S. retail economy.

How to find relative strength stocks

A client asks: “How do you select the relative strength stocks?  Do you check one by one or do you have a tool?”

One of the best ways to find relative strength trading candidates is to look for actively traded stocks which exhibit a distinctive pattern of higher highs and higher lows in their 1-3 month chart patterns when compared against the major indices.  Arguably the best high-probability relative strength set-up for a trade is to look for such patterns following a decline in the S&P 500 Index (SPX).  When the SPX has made a series of lower highs and lows over, say, a 1-2 month period you will often find individual stocks that have made higher highs and lows during the same period.  These stocks normally reflect insider buying, since typically only the “smart money” is savvy enough to purchase stocks in a broad market downtrend.  The assumption behind this pattern is that informed traders are “in the know” and expect the stock to rebound with a market-beating performance once the broad market decline bottoms out and reverses.

A good example of a relative strength stock in recent months is EPAM Systems (EPAM), which in two different instances maintained its relative strength position versus the S&P during market pullbacks.  The first such instance was in the May-June period when the SPX made lower highs and lows while EPAM made higher highs and lows.  More recently, EPAM made higher highs and low during the August broad market pullback, which presaged its strong performance in September.

A fast way of checking for relative strength is by simply going to Bigcharts.com and typing in the stock symbol (say for IBM) and then selecting the "Compare To" button.  This provides a pull-down menu and you can either select an index for comparison (in this case the S&P 500) or else type in a symbol of the stock, ETF or index of your choice).  The chart shows the price line of IBM compared against that of the SPX (or whichever symbol you select).  If the stock's price line is above that of the SPX, then you can automatically see that it's in a relative strength position -- especially if it has been outperforming the index for a period of several weeks or months.

Stock market participation in decline

Despite the major indices at new all-time highs, the rate of participation among American investors has been declining.  Consider that TD Ameritrade’s Investor Movement Index (IMX) has made a series of lower highs and lower lows since peaking at the beginning of March.  During the last 6 ½ months since investor participation peaked according to IMX, the S&P 500 Index (SPX) has gone on to make a series of higher highs.  It’s extremely rare that such an extended period of stock market gains coincide with declining participation.  Normally new highs in the major averages bring in a flood of new money from investors hungry to get in on the action. 

According to the latest data from the Investment Company Institute (ICI), equity market inflows continue to be pretty much non-existent much as they have been in recent months.  The following graph shows total inflows to be hovering barely above the “zero” level.  If ever there was a picture which captures the complete lack of interest in stocks among the public, this is it.

The principles of contrarianism tell us that stock market tops are unlikely to occur when public interest in stocks is at low ebb.  Instead, major tops normally occur when the public becomes highly interested in stocks and has a big stake in the equity market.  That certainly was the case leading up to the major tops of the last three decades.  

It’s possible that the broad market rally after the Fed announced it would continue QE3 will kindle a revival of interest among retail investors.  If so, we can expect to see increased money flows into equities and, in the not-too-distant-future, the corresponding market top that usually accompanies such widespread enthusiasm.

A shake-up for the Dow

The Dow Jones Industrial Average is getting another makeover this week.  On Sept. 20, the Dow 30 stock industrial index will replace three of its older components – Alcoa, Bank of America, and Hewlett Packard – and will replace them with Goldman Sachs, Visa, and Nike.  This makes the 52^nd time since its inception in 1885 that the index has changed components. 

The change was prompted by the underperforming stock prices of the outgoing components, according to a spokesman for S&P Dow Jones Indices.  The index committee also cited a desire to diversify as a reason for the change.  According to Bloomberg’s Nick Taborek, it’s the Dow’s “biggest reshuffling since April 2004.”  The Dow’s proportions are determined by the dollar value of its constituent stocks, and the addition of the three high-priced stocks will reduce the relative weight of other stocks in the index, significantly boosting the share of financial firms in the index.  Visa will carry 7.7% of the Dow’s value while Goldman will have 6.9%.  Visa and Goldman will also become the second- and third-most important stocks in the index, according to Bloomberg.  

Timing is always an issue whenever the Dow 30 index is recast.  In seven of the eight previous instances since 1999 when the Dow’s components were changed the index was lower within a month.  The only exception to this was in Nov. 1, 1999 when the Dow’s components were changed and the Dow was higher for the next two-and-a-half months before peaking.  In the last 10 years the Dow has always slumped – in varying degrees – in the weeks following realignment.  

Could the latest Dow 30 shuffle result in yet another short-term top?  Considering the month of September often witnesses a top, and considering that two of the high-profile Dow replacement stocks are hefty financial firms (at a time when pundits are cheering the resurgence of the financial sector), the contrarian play would seem to favor an October pullback for the indices.  

Magazine cover indicator rears its head

Contrarians take note: The latest issue of Time magazine featured another one of those infamous bull market covers.  The bull was displayed rather prominently on the cover under the headline, “How Wall Street Won.” 

The cover was clearly celebratory in nature, yet the sub-heading for the article sounded a decidedly cautious note: “Five Years After The Crash, It Could Happen All Over Again.”  Normally the Time cover would be interpreted as a contrarian bearish signal for the stock market – a “heads up” warning that a topping process could well be underway with the potential for a sharp reversal in the coming weeks or months.  The addition of the proviso about a potential market crash, however, would lead one to speculate that perhaps the somewhat bearish tone of the article cancels out the cover’s implication.  One of the pioneers of the magazine cover indicator, Paul Macrae Montgomery, has offered a different spin on the latest Time cover, however.  He related to Randall Forsyth in this week’s issue of Barron’s that the cover’s graphic superseded the cautionary message of the Time magazine article.

“If historic probabilities reliably forecast the future, there’s an 80% chance the market will top in a month and will be lower a year from now,” he told Forsyth.  Montgomery’s analysis of the latest Time cover jibes with some other recent magazine covers which point to excessive optimism among investors.  For instance, the aforementioned Barron’s published a “bull” cover on September 2 under the headline, “The Bull’s In Charge.”  The cover featured a smiling, sunglasses-wearing bull holding multiple shopping bags while talking on a cell phone; in the background an angry bear simmers at being left out of the shopping spree. 

In last week’s issue of Bloomberg Businessweek the cover featured a picture of the world’s biggest ship being constructed by shipping line Maersk.  The cover is significant since record-breaking structures like skyscrapers and ships tend to coincide with peaks in the economy. 

To be sure, the magazine cover indicator isn’t infallible and it’s admittedly more reliable, for timing purposes, at bottoms than at tops.  Nevertheless, a slew of optimistic magazine covers featuring bulls or other symbols of extreme optimism are common in the weeks and months leading up to major tops.  Ironically, the latest Time cover doesn’t present us with a timing tool but it does at least provide a warning that the market could be in the process of rolling over as we heading into the fall.  Take this message with a grain of salt if you must, but keep it in mind as we head into the fourth quarter, especially if the NYSE internal momentum indicators start deteriorating.  

The silent assassin of the U.S. economy

When most people think about the biggest threats to the U.S. economy they usually mention things like the budget deficit, the national debt or the trade gap.  What rarely gets mentioned as a potential economy killer is something we all have to face every day yet mainstream economists refuse to acknowledge it. 

The biggest problem in the economy isn’t the excessive amount of public or private debt; it’s the extremely high level of prices for basic commodities like food and fuel.  Economists consistently underestimate how much of the middle class worker’s paycheck goes to buying these two essential needs.   For all of its successes, the Fed’s QE program did nothing to alleviate high retail food and fuel prices.  If anything, it may have actually increased them.

Consider that during the Great Recession while stock and commodity prices were falling along with interest rates, retail food prices barely fell at all.  This was partly due to the “stickiness” of retail prices but also to the fact that the cleansing effects of deflation were never allowed to completely wash through the economy.  The Treasury and the Federal Reserve immediately set to work in providing abundant stimulus money in order to boost prices and prevent deflation from working its magic.  As the following graph of the New Economy Index (NEI) shows, they were wildly successful in this endeavor. 

In boosting asset prices, the Fed also created a spillover effect which increased the already high retail price level.  Diesel prices, which have a profound impact on the prices of a wide range of retail goods, rose to extremely high levels and took a bite into consumers’ paychecks.  Added to the higher prices the middle class was forced to absorb was a muted housing market correction.  Although home prices declined during 2007-2011, they found a bottom at a much higher level than would have been the case had deflation been allowed to completely run its course.

In its relentless fight against deflation, the Fed has set the stage for even higher retail prices once the 120-year cycle bottoms next year.  Ironically, it might just be inflation that destroys all the Fed’s efforts at defeating deflation after 2014.  This would come as no surprise to Fed historians: central banks are notorious for fighting yesterday’s war.

True inflation, however, is still a ways off.  Right now the deflationary undercurrents of the 120-year cycle still threaten global economic stability for at least one more year.  The Fed has apparently concluded that its anti-deflationary stimulus measures have succeeded in healing the economy.  The bank is therefore considering scaling back its monthly asset purchases, possibly as soon as this fall.  As we talked about in a previous report, the mere hint of the Fed “tapering” has essentially created a tight money situation in the bond market as investors have dumped Treasuries and municipal bond in anticipation of higher rates.  In doing so they’ve created a self-fulfilling prophecy of higher rates which is already being felt in the mortgage lending and real estate sector. 

Economists are lining up to put a bullish spin on the rising rates.  Many contend that rising rates reflect a strengthening economy.  While this may be true in normal circumstances, it’s not the case here.  Rates only started rising after it was hinted that the Fed might scale back its asset purchases, which in effect created a quasi-tight money situation.  In other words, investors began acting on the assumption that a tighter Fed monetary policy will soon become a reality – by dumping bonds – which in turn led to higher rates.  This action doesn’t reflect a strengthening economy; rather, it shows that investors realized the days of the Fed-assisted bond bull market were numbered.  Needless to say that the repercussion of a tighter money policy on the economy won’t be pretty in 2014 when the deflationary super cycle enter its final “hard down” phase. 

On the score of a QE tapering, the economists at Kiplinger believe the Fed will start phasing out bond purchases in December.  Chairman Bernanke’s term ends in January, and Fed watchers increasingly see the hawkish Larry Summers as his replacement.  Some Fed watchers also believe the Fed could maintain its purchase of mortgage-backed securities even after it slows its Treasury purchases in a bid to supporting the housing market.  Regardless of how it turns out, the Fed is clearly heading in the direction of diminishing the scale of its asset purchases.  This strategy, if pursued, will run counter to the deflationary headwinds that will be increasing on a monthly basis starting in 2014. 

Gold: An attitude adjustment for bankers

The last couple of weeks have witnessed changing attitudes of large institutions concerning the gold price.  A growing number of institutional analysts are become bullish – some them ultra bullish – on gold’s near-term outlook.  What makes this unusual is the fact that only a few weeks ago they were singing a bearish tune.  The swift attitude adjustment is a testament to the strong impact of rising prices on the investor psyche.

 

For instance, it was recently reported that Citigroup expects gold will rise to $1,500-$1,525 – a gain of over 6% from today’s prices.  Moreover, Citigroup’s Tom Fitzpatrick’s forecast that gold could reach $3,500 “in the next couple of years.”  He also sees silver jumping to $100/oz. 

 

Joining the bullish bandwagon for gold is Societe Generale, but with a twist: SOCGEN analyst Albert Edwards foresees a stock market crash on the horizon; he also believes the gold price will climb to $10,000 as investors rush into safe haven investments.  Back in June, SOCGEN analysts Michael Haigh, Jesper Dannesboe and Robin Bhar argued that ETF selling and plummeting jewelry demand would result in a Q4 gold price of $1,200/oz.  SOCGEN also recommended dumping safe havens like gold in exchange for buying bank and consumer retail stocks back in June.  Talk about a reversal of sentiment!

 

Sounding a more level-headed note, Goldman Sachs recently weighed in on gold’s near-term prospects.  Goldman has been rather quiet after correctly predicting the May-June gold sell-off and subsequent market bottom.  Of the major institutions, Goldman is by far the most accurate when making forecasts, though I should point out that even mighty Goldman sometimes gets it wrong.  (Remember the blown $200/barrel oil forecast in 2008?)

 

According to The Economic Times, Goldman Sachs raised its gold forecast for the second half of 2013 to $1,388/oz. from $1,300/oz. based on the metal’s recent price action.  The firm is maintaining its intermediate-term and long-term price forecasts, however.  Of the major institutions that have made gold price forecasts, Goldman Sachs seems to be the most balanced and realistic. 

 

"We believe the recent uptick is a result of investors positioning themselves for an increase in inflation rates and speculation regarding a potential military strike on Syria," the bank said in an equity research note dated Sept 2. 

 

According to The Economic Times, Goldman said it expects gold prices to ease, longer term, on improvement in the U.S. economy and the reining in of an accommodative Federal Reserve monetary policy.

 

As noted previously, the implication of these high-profile institutional predictions is that sentiment among the big banks on the metals is becoming optimistic bordering on giddy.  This isn’t exactly a good sign from a contrarian perspective.  Already gold has violated its 15-day moving average to technically break the immediate-term uptrend.  While this may prove to be merely a temporarily “pause that refreshes” for the metal, conservative traders should treat the signal with respect and wait for the buyers to reassert themselves by retaking the 15-da MA.

 

 

I would also point out that the non-commercial short position among gold speculators, after rising to a multi-year record level recently, has dropped precipitously in recent weeks.  Analyst Tyler Durden has pointed out that short positions in the gold futures and options market have dropped for six of the last seven weeks.  “The 60% drop in the non-commercial short position represents a massive 81,700 contracts (8,170,000 ounces or ~$10.6 billion worth of notional ‘paper’ gold),” he wrote.  He further noted, “Gold’s 21% rise from the lows in the last 2 months is among the fastest rises since 1999; and GLD holdings have risen for the last 6 days in a row.” 

 

The sharp decline in gold short positions gives us another reason to exercise caution in the near term since bearish sentiment is rapidly being replaced by bullish sentiment.  This can create irrational expectations for short-term gains among speculators.  Should these gains be disappointed it can result in a potentially sharp pullback in the gold and silver prices.

The shifting tides of investor sentiment

The overall sentiment among investors has shifted from complacency to worry in the last few days, an emotion that was conspicuously lacking in recent weeks as the market drifted sideways-to-lower from mid-July through late August.  For instance, the CNNMoney Fear & Greed Index has fallen to a multi-week low of just 22% (out of a possible 100%), a reading which indicates a high level of fear among market participants. 

Also worth mentioning is the Arms index (also known as TRIN, or Short-Term Trading Index), which is a measure of market breadth.  The Arms index (named after its developer Richard Arms) tends to spike higher at or near short-term market bottoms and lower when the market is “overbought.”  On Tuesday the Arms index had one of its highest readings of the year at 2.65 (below). 

I don’t think we’ve arrived at an interim bottom yet, but given the increasing levels of fear on Wall Street we should be getting close to one.  The S&P 500 Index (SPX) found temporary support on Tuesday and Wednesday at its 120-day moving average (see chart below).  We’ve discussed the technical importance of this particular moving average in recent reports and you’ll notice that the previous correction low was stopped at the 120-day MA intersection back in late June.  As mentioned earlier in tonight’s report, it was on the very day the SPX touched the 120-day MA on June 24 that the up/down volume ratio was very similar to what it was on Tuesday of this week.  It’s still too early to tell with any certainty whether the SPX will establish interim support above this important trend line, however.  It should be good for at least a temporary support for the next couple of days, however, or until the short-term cycle bottoms as we’ll discuss below.  [Excerpted from the Aug. 28 issue of Momentum Strategies Report]

Interest rate pressure still being felt

The issue of the week for the financial market is the continued strength in the 10-year Treasury yield.  The 6% intraday rally in the CBOE 10 Year Treasury Note Index (TNX) on Tuesday made its presence immediately felt by putting a damper on an early stock market rally attempt.  What began as a 130-point rally for the Dow 30 index was quickly reversed by noon on Tuesday when the Dow gave back nearly all its gains thanks to the TNX rally.

The 6% TNX rally also caused an increase in the number of stocks making new 52-week lows on the NYSE.  By 12:30 on Tuesday that number had risen to 50, a sign that internal selling pressure is still a problem for the stock market.

There are preliminary signs that the rally in interest rates may soon reverse, at least temporarily.  Consider for instance that a recent Bullish Consensus poll for Treasuries hit a 1-year low of 21%, a level commensurate with past bond market bottoms (and yield peaks).  There are negative divergences in a number of technical indicators, such as the MACD indicator shown below.

A short-term reversal of the uptrend would be signaled by a close below the 30-day moving average shown in the above chart.  It must be emphasized, however, that as long as TNX remains above the rising 30-day MA the dominant short-term trend for the Treasury yield remains up.  A reversal of the TNX rally would be most welcome and would at least temporarily remove the recent pressure from equities.