As 10-year Treasury yields basically undoes whatever happened in October, equities are finding much comfort especially in the last two days. Tech stocks have been surging but general sentiment in itself is extremely buoyed as major indices look to wrap up the week with another round of gains. That would make it five for five on the week.
And in the context of how that compares to previous weeks, the S&P 500 is looking to erase the previous two weeks of losses just this week alone. The index fell to 4,327 at the end of the first week in October before dropping to 4,117 at the end of last week. And as of the close yesterday, it is back up to 4,317 already.
That being said, it’s not all sunshine and roses just yet for stocks. In the bigger picture, there is still a semblance of a lower highs, lower lows pattern in the index:
It would require a push back above 4,400 and arguably the 100-day moving average (red line) to invalidate that pattern and downside momentum.
There’s no denying that perhaps it is looking plausible. But then again, it all comes down to what happens in the bond market next. And there’s still a big question mark on that for the time being I would say.