Have you noticed how dull bonds have become? Every day after the close I jot down the yield on the various bonds: the five year, 10 year, and so on. It occurred to me no one talks about bonds anymore probably because the yield barely changes from day to day.
I stare at the chart of the yield on the 10 year Treasury, and, you might recall, I had thought we'd see a bounce off that .6% level and that the resistance at .75% would be tough to get through. But I really didn't think we'd go from the wild swings we saw in February and March to literally no interest in April and May.
I know the chart says we should breakout over that .75% level. Why does it say that? Because since late April there have been a series of higher lows and higher highs. Yet my inclination is that we're more apt to see bonds rally and yields fall.
I also find myself looking at the chart of the iShares MSCI fund (EWH) for the Hong Kong market. I know it seemed like passing news on Thursday, but the shape of the EWH chart is similar to the shape of yields since April. More than most markets, EWH has a perfect rectangle in place for the last seven weeks. So, if investors decide to panic out of Hong Kong, and therefore the lower resistance breaks, it is possible that the yield on our bonds goes down, too.
I think it should be watched closely.
Away from that not much changed during Thursday's decline. The indicators have barely shifted. Sure breadth was good -- it stayed flat for the day -- but the cumulative advance/decline line is still at a lower high. The McClellan Summation Index is still waffling around, although it is heading up.
The number of stocks making new highs did not increase, but the number of new lows did not increase, either.
About the only thing that shifted marginally is that the American Association of Individual Investors saw the weekly survey with a five point move up in bulls and they came almost directly from the bear camp. The put/call ratio lifted a bit on Thursday, to 86%, the highest reading in a week, but the 10-day moving average remains low.
In fact the 10-day moving average of the equity put/call ratio is closing in on levels last seen in January 2018 and June 2018, so it's hard to say folks are terribly bearish on stocks. Yes, I know there are indicators out there that don't show folks being bullish, but this one is not one of them.
In my view there is not enough weakness in the indicators to be terribly bearish, but there is not enough strength to be bullish, either. That's why I think we continue roller roaster riding. We just keep rallying and get tired quickly and we sell off and get tired quickly. But right now it's the quiet in the bond market that has captured my attention.