T-Bonds and Gold Signal Impending Stock Market Break
Treasury futures rallied in flight-to-safety buying as yields in the 30-Year Bonds and 10-Year Notes plunged. Expectations are the Fed is likely to keep interest rates down for a prolonged period of time. Despite the early recovery in the equity markets, the Treasurys held their ground, suggesting that there is real concern about the condition of the economy.
Divergence Signal in Stock Indices could be Indicating Top
U.S. stock indices finished mixed on Wednesday. While the NASDAQ remained firm throughout the day on the heels of strong earnings from Apple, the S&P 500 floundered because of weaker financial stocks. Traders are nervous over the outcome of the proposed financial regulation bill before Congress.
The June E-mini S&P 500 finished lower for the week after forming a closing price reversal top, signaling the possible start of a 2 to 3 week break. This weak close was the only lower close out of the big three indices, creating a divergence which may be another signal that this strong rally has finally reached at least a short-term peak.