Stocks Swoon as Treasury Market Tanks

The sell-off in U.S. Treasury securities appears to be finally weighing on the stock market. The prospect of higher interest rates may now be on the minds of stock traders and investors, as higher interest rates will stunt any U.S. recovery. The yield on the 10 Year Treasury Note is now over 3.7%, a full 120 basis points above the yield when the Fed announced its $300 billion Treasury purchase program in March.

Yesterday, I intentionally stayed quiet because I thought it was a bogus move, as the volume was a bit light for such a big move. Today, the market did not give back all of those gains, but there is an ominous formation that is potentially forming on the chart of the S&P 500 and the Dow. This is the Descending Triangle Top. If broken to the downside, it often leads to a sharp move down. That could be the final leg down in this Bear Market. Or, you could view it as the first correction in a new Bull Market. Either way, I think we are looking at a sluggish market going forward.

In my view, there seems to be too much bullish sentiment on Wall Street and now on Main Street, with these recent consumer confidence figures. Next week, we get another view of the employment situation, and that will likely be a market mover.

Stay Tuned!

Scott Cole
www.theultimatestocktradingsystem.com