BofAML: "Equities Are Set To Top And Roll"

Tyler Durden's picture

"Equities are set to top and roll over," and BofAML's Macneil Curry remains bullish US Treasuries despite today's stability (so far) from recent stock gains. He remains negative on risk assets and believes US equities are posied for another leg lower (with perhaps tomorrow's Yellen testimony the un-taper punchbowl removal catalyst) and warns  bond bears that a break below 2.657% on the 10Y would indicate the downtrend in yields has resumed. Elsewhere Curry adds "gold is coming to life."

Via BofAML's Macneil Curry,

Equities are set to top and roll, risk to follow

We look for the cash S&P500 to top between 1800/1823 (approximately 1795/1818 in ESH), with downside targets seen to 1712/1686 (or approximately 1700/1680 in ESH3). Looking specifically at ESH4, a break of 3d trendline support (now 1774.00) would be the 1st sign of topping, with a close below 1760.25 confirming a resumption lower for the S&P500

US Treasuries: Stay bullish. Below 2.657% to 2.544% / 2.399%

With risk assets poised to roll lower, we remain bullish US Treasuries. Looking specifically at 10yr yields, a close below 2.657% says the downtrend has resumed for the larger range lows between 2.544% / 2.399%. Bears need a break of 2.788% to invalidate our bullish outlook and say that a base has transpired

The US $ Index is choppy but still bullish

While the US $ Index is far more choppy than we have anticipated, it is still bullish for 82.15/82.55. This view would be given a significant blow below 80.15, and would be invalidated below 79.68.

Gold is coming to life, but it’s the close that matters

A daily close above 1273 confirms a Triangle breakout and further near term strength towards 1321, potentially beyond to the confluence of long term support between 1358/1381.