10 YR Yield, USD/JPY, RUSSELL 2000 and FTSE 100 Forecasts – Fear Continues to Grip the Markets

US 10-Year Yield Technical Analysis

So, if you’ve been watching over the last week and a half or so, I’ve brought up the 10-year yield chart almost every day. Today won’t be any different. We’re at 4.46% and rates are screaming higher, and this is going to have a very negative effect on risk appetite.

We’re getting close to an area that’s been somewhat choppy and difficult, but I think as long as we stay somewhat stout here on the 10-year yield, you have to assume the dollar and therefore risk appetite continues to struggle.

USD/JPY Yield Technical Analysis

Speaking of the dollar, I’m watching it against the Japanese yen, and this is the area, the 160 area, that the Bank of Japan has intervened in a couple of times in the past, mainly just verbally. But if we can break 160.40, I think this is a situation where the market could really just take off for a long-term move.

And when I say long-term, we could be talking for a few years. This is the high from 1990, where we are roughly, and breaking that, of course, would be a big deal. If we turn around and fall from here, which is still possible, the 158 level is support. I think this is still a short-term buy on the dip type of market, but be advised that the Bank of Japan is probably watching this closely.

RUSSELL 2000 Yield Technical Analysis

The Russell 2000 I’m watching because, quite frankly, if it falls apart, it could give a little bit of a heads up to how the other indices in the United States behave. With concerns about the global economy slowing down and inflation, the Russell 2000 is going to be particularly sensitive, as these are smaller companies making it up.

I do think that this probably goes looking towards the 2400 level sometime during the next session or two. Any short-term rally, I’d be fading, with the exception of if there’s some type of really good development coming out of the Middle East, then you probably don’t short anything at that point. If we did turn around and break the 50-day EMA, it would matter a lot. We’re probably not going to do that during Friday.

FTSE 100 Yield Technical Analysis

And the final chart that I’m watching closely is the FTSE 100 because it did try to rally a bit during the early hours, but it failed at 10,000. Things like that capture my attention because large round numbers generally mean there are options barriers.

If we continue to show sluggishness today, I’m looking for this to drop over the next couple of days, perhaps down to the 200-day EMA. I am fading short-term rallies. I do recognize that things will remain choppy. I think 10,000 is a nice area for short sellers to look for opportunity if we do bounce, and if not and we break down below 9,850, then I think you’ve got the opportunity to perhaps look for shorts there as well.