10 YR Yield, PL, AUD/USD and XLE Forecasts – Looking at Multiple Ways to Place Risk Appetite

10-Year Treasury Yield Technical Analysis

The first chart in front of you is the 10-year yield. We are approaching the 4.20% level again as yields continue to climb. That makes the US dollar a little bit more attractive, but we will have to wait and see how that plays out. I do not really trade the yield itself via bonds and the futures markets or things like that, but I keep an eye on where it is going to give me an idea of the general attitude of the market. If yields start to climb, that can put a little bit of a boost in the dollar, so it is something worth watching. If we can break above 4.20%, we could start working our way back to 4.25%.

Platinum Technical Analysis

I am watching platinum. I think platinum gets interesting if we pull back into the hammer that formed on Monday. Somewhere around $2,100, I will be looking for a short-term bounce, perhaps on the hourly chart, as metals, of course, have been all over the place. Keep in mind that platinum is a little bit different than silver in the sense that it is actually used quite a bit more, so it tends to have more of a supply and demand issue with it as opposed to the bubble that we had just seen, where supply really had people nervous. Again, I am watching this little cluster here where we had a lot of volume come in at $2,100 for platinum and we will see if I get that opportunity.

AUD/USD Technical Analysis

A currency that I am watching very closely right now is the Australian dollar because I think we are in the midst of trying to make a decision as to what happens next. The 0.7150 level is an area that has been defended quite heavily, but in the last couple of days we have seen an attempt to get above there. If we continue to rally from here, that could open up a reasonably decent move, perhaps to the 0.73 level, maybe even 0.75.

This would be based on a couple of different things. The Reserve Bank of Australia recently raised rates and are on track to do a little bit more. Inflation could be an issue, but we also have commodity demand, with the commodity markets obviously under a lot of pressure from multiple different reasons. That tends to benefit the Australian dollar. So, if we can stay above 0.7150 for at least a couple of hours, then I think that might be a sign to start buying. Right now, though, I would say if we dropped below 0.7115, then it is a false breakout. It is a chart that I will be watching all day. I do think eventually we may resolve to the upside, barring some type of external or headline shock.

XLE (Energy Select Sector SPDR Fund) Technical Analysis

The last chart is the XLE. It is an ETF for the energy markets. It is a safer way to play crude oil basically, although it also has crude oil stocks, companies, refiners, etc., as well as I do believe it has a little bit of exposure to natural gas. So, it does tend to dampen down some of the potential danger here.

I am watching this market because it does look like it is drifting a little bit lower, but I would be very interested in buying it somewhere around $54.60. As long as we can stay above the $53.50 level, I think we are in pretty good shape. This is an ETF that I really like using in times like this, when the oil markets are on fire, because if you are wrong, you are not horribly wrong. If you are right, you get a decent return. It won’t give you the kind of momentum that oil futures can, but then again, it protects your account. This is a safety play, if you will, to avoid some of the dangers in energy. We will see if I get that pullback to right around $54.60 and a little bit of a bounce. I think that is about the time I get involved.