10 YR Yield, USD/JPY, S&P 500 and DAX Forecasts – Markets React to Powell

US10Y Technical Analysis

The first chart I have in front of you is the 10-year yield in the United States. You can see it did spike a little bit, but now we are just sitting right in the same range. In other words, I think what we just got was nothing. I don’t know that a lot has changed and a lot of the panic that we have seen in certain quarters may dissipate. So, this is a good sign that things are going to stabilize rather quickly. I don’t read too much into this chart, but I do pay attention to 4.2% and 4.3% because it could give us the next setups in other markets.

USD/JPY Technical Analysis

The US dollar is trying to stabilize against the Japanese yen. I think ultimately, we do have a buying opportunity here due to the interest rate differential. We are already hearing the crescendo of nonsense on social media about how the United States is falling apart, this is finally it. As somebody who has been here for 21 years now, I can tell you hear this every 2 years and then the market rips in the other direction. That has been the case 100% of the time.

So, with that being the case, I am watching the US dollar as it sits above the 200-day EMA against the Japanese yen. Above 154 I become very interested. That is something that we might see by the end of the day or possibly even a Friday situation. But as you know, I until the last couple of days had been long in this market for quite some time and picked up quite a bit of swap differential.

S&P 500 Technical Analysis

I do think the S&P 500 is ready to break much higher. This is a market that did break above 7000 over the last couple of days. I think if we can get above 7020, this thing rips much higher. We are in the midst of earnings season, but you can clearly see that the market is leaning to the upside.

There is no short trade here. I understand that some of you are intraday traders and trade the 5-minute chart; I am telling you now, this is not a market to play around with. It really looks like it is ready to go, and I suspect we probably make a move towards the 7200 level over the next several weeks.

DAX Technical Analysis

Finally, the German DAX. This is an index I like a lot this year. The Germans are just tossing money at everything, and stimulus typically means the stock market does really well. You will notice that we broke out above the 24,500 euro level about 3 or 4 weeks ago. Now we are there again with the 50-day EMA offering support and a hammer being formed.

With all of this fiscal spending and military ramp-up and a whole host of other things going on in Germany, this is good for corporations. The one drag would be the geopolitics around trade tariffs, so I think that is part of what is keeping this down. We have had a couple of big movers here recently like Bayer has suffered because of trade tariff concerns; ASML has done really well. There are other big players like Siemens that are in the mix. I think this is a situation where longer-term this is a buying opportunity, and it looks like at least as things stand right now, the 24,500 euro level is holding quite nicely as support.

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