10-Year Yield
The first chart I’m looking at is the 10-year yield in the United States. It is breaking to higher levels again. We’ll see if we break out, but this could have major implications on the stock market and beyond, as well as currency markets. If this keeps up, this should be a bit concerning for traders as it suggests that risk appetite might be taking a bit of a hit. This has been relentless, and the situation in the Middle East is not helping the interest rate situation in the United States and beyond. It’s everywhere; it’s a global thing, so definitely something that I’ll be watching.
GBP/USD
The British pound has pulled back from the crucial 1.3550 level. That’s an area that previously had been resistant a couple of times, and now it looks like it is going to continue to be so. The question is, will we accelerate to the downside? If we do, and we start to see the US dollar spike perhaps due to those rising yields, this is a market that I might be looking to short, not because I don’t like the pound, just because of the technical setup here.
ZC (Corn)
Corn is suddenly interesting. Breaking 470 would be a situation that I’d have to get very bullish in, but I also have to ask whether or not we’re forming a double top. If we start to break down today, it might be worth my time at least to short, maybe an intraday trade. I wouldn’t necessarily get married to a position in the corn futures markets, but it is setting up quite nicely. Higher yields perhaps having an influence, but the recent rains and flooding that we’ve had in parts of the United States have added some upward pressure as traders worry about crops.
XLE
And finally, XLE energy ETF. This thing looks like it’s going to gap a little bit higher. It certainly looks as if it wants to continue the bullish run that we’ve seen over the last couple of weeks. We had a nice bullish flag that I told you about 2 or 3 weeks ago that was forming.
We have broken out of it, and the market has continued to the upside with the direct influence of inflation and interest rates going higher being energy. It makes sense that the XLE continues to attract inflows.
It is getting ready to break this swing high back in March and perhaps continue higher from there. I’m very bullish on this ETF.