Yields...the Final Piece?

I've made no small issue of my opinion on 30 year yields and the need to watch 30 year treasury bond futures and TLT (20+ year treasury bond fund) because of the correlation with the market, the consistiency of that correlation and it being a very near term/timing indicator.

Yesterday you saw 30 year yields in lock step with the SPX, in numerous Leading Indicator posts I have also shown the larger, longer term correlation and consistiency as well. In nearly every case, when the SPX and 30 year rates diverge, the SPX always loses and rates are correct, they are a leading indicator, but with a much shorter lead time than our traditional leading indicators which tend to be more useful to give us an idea of the magnitude of the coming move via the size and length of their dislocation or divergence. Thus as a timing indication, watching everything about the 30 year yield the last several days (this week) has been key.

Even in last night's Daily Wrap, around 8 p.m. I had written this about the signals at that moment in the market...

"Interestingly as Index futures are fading momentum right now, the 30 year T Futures are right there to put in a positive at the same exact time (keep in mind the market has been moving with 30 year yields and the 30 year bond trades opposite yields, thus this positive divegrence tonight..."

Look at this morning's correlation after a negative dislocation in to yesterday afternoon...

SPY in green vs 30 year yields (red) in near perfect correlation, the only dislocations were the SPY a.m. lows in which yields remained positive and pulled the market higher and a negative dislocation in to the bond market's 3 p.m. close. Look at the dislocation this morning!

I suspect the market is not as negative as yields suggest it should be because of an option expiration max pain pin, which we also talked about last night- typically lasting until about 2-3 p.m. on Friday's, but otherwise yields are SCREAMING for lower prices right NOW.

The divergences in TLT which started with only a 1 min and 60 min chart, much like the 30-year Treasury futures with positive 5 min and 60 min charts, have migrated, yesterday they started and moved quickly to longer intraday timeframes. As of now...

The 1 min (that should be a white arrow for a positive divegrence)

The 3 min showing a small negative sending TLT lower and market higher and the current migration to a positive 3 min chart.

a 5 min chart showing the same drop in 30 year treasuries along with a move higher in the averages and a positive divegrence, this is fast migration.

Now we are getting 10 min relative positives which we had no sign of a few days ago

And even 30 min positives, this is nearly a full house finally reaching the 60 min positive that was first sighted with the 1 min positive a couple of days ago.

And a large 60 min positive divegrence.

These divergences are becoming so consistent, I would nearly consider trading TLT long or TBT short whereas a few days ago despite divergences starting, I'd have nothing to do with a trade here based on the evidence, the point is the broader market though.

Perhaps last night's signals really did mean something as 30 year Treasury bond futures have rocketed higher this morning, sending yields lower and the market is positively correlated (1.0) with yields suggesting we may be at the point of an actual market pivot, something I've had no doubt personally we'd see as well as a new LOWER LOW.

You can keep an eye on the progression by overlaying 30 year rates, TYX or TYX-X in most programs, over the SPX and watch the divergence/dislocations.

I suspect we may have just hit the pivot, still giving us a sharp reversal process, not as sharp as the "V", but in proportion to the normal size of bottom reversals ratio vs top reversals.