"Our bearish view on the S&P 500 is wrong," remarks BofAML's Macneil Curry, as yesterday's close above 1,823 points to the larger uptrend resuming. However, despite the equity strength, Curry says "stay bullish Treasuries" as price action points to further gains. The USD's bullish trend is at risk and pressured by silver strength.
Via BofAML's Macneil Curry,
Our bearish S&P500 view is wrong. Further gains in store.
Up until yesterday we had been bearish risk assets and the S&P500.Yesterday's close above 1823 (top of the daily cloud) says that view is WRONG and that the larger uptrend has resumed. Indeed the daily Bullish Engulfing Candle against the pivotal 50d avg (1811) provides further bullish evidence for a test of the mid-Jan highs at 1851, through which opens 28m channel resistance at 1872. Back below the 50d on a closing basis points to a more choppy environment than currently thought.
Stay bullish Treasuries
Despite the turn higher in equities, the price action in Treasuries says STAY BULLISH. Looking specifically at 5yr yields and TYH4, the impulsive moves from Feb-03 extremes at 1.582% & 125-03 say that the month to date correction is finished and that the larger bull trend is resuming. Further supportive of this view is the fact that the overnight pullback in TYH4 from 125-31 (and 1.482% in 5yr yields) has unfolded in a counter trend manner. NOW, watch key resistance in 5yr and 10yr yields at 1.470% & 2.692%, respectively. Below these levels provides further evidence that the bull trend is resuming. In TYH4 we would like to see a daily close above the overnight high at 125-31. Through these levels target a test and break of the 200d in 5s (1.380%), 126-25 (Oct-30 high in TYH4) and 2.544% in 10s. our bullish view is wrong thru 1.582% (5s), 125-03 (TYH4) and 2.788% (10s).
The US $ is at risk, especially against £
We have been bullish the US $ Index, looking for topping in both £/$ and €/$. That bullish US $ view is NOW on the ropes as the repeated failure of the US $ to stage a rally warns off significant underlying weakness. Indeed a DXY break of 79.68 (Dec-27 low) and a €/$ break of 1.3737 (Dec-27 high) would invalidate our bullish US $ view. However, probably the most important level to watch is the £/$ Apr'11 high at 1.6748. With daily RSI breaking out a closing break of 1.6748 would clear the way for the Aug'09 highs at 1.7044
The Silver breakout adds to the US $ woes
Adding to the US $ woes is the recent strength in precious metals. 1st it was gold, now it is silver. Today's spot silver break of 3m range highs and 7m pivot between 20.62/20.51 points to a medium term base and further gains to 22.40/23.09