TLT-Yields

It looks like we're going to get that intraday bounce mentioned earlier, again if you are going to play some of these intraday trades (I'm not), remember the risk that's not far away.

that being said, we do have a change of character that may be meaningful in the near term, perhaps that bounce after this week being down, which is nothing unusual. As I've mentioned before, even in a full blown bear market, we typically see just about as many up days as down days.

In any case, yields as a leading indicator have been dragging the market around by the nose ever since the bounce started around July 10th, first to the upside, then to the downside as you have likely seen numerous times in any of the Leading Indicator Updates.

Yesterday I made note of the start of a negative divergence in TLT (20+ year bonds), which is very similar to the 30 year bonds/yields that have been dragging the market around as a leading indicator, one of my favorite when it's not in a carry trade unwind mode.

In any case, this is getting more interesting, it could be for an options expiration pin as they may not want prices moving too far from the area, but it is also growing and has added a bit in a day so I thought it worthy of mention as the last several weeks we have had a stronger early part of the week or Monday in the Week Ahead forecasts.

Here you can see 30 year yields which act like a magnet as a leading indicator for the major market averages or equities in general.

 SPY in green vs 30 year yields in red. At the start of the bounce on July 10th, Yields were already leading to the upside on the 9th and through the 13th when they started losing momentum and turning down, clearly down by July 16th in to the head fake move in yellow on the 20th 2 days later, the optimum short entry. Since they have just led lower and lower wit the SPX in tow.

 This is the 1 min intraday TLT chart which is where I saw some initial signs of a negative divergence yesterday and posted the chart.

 This is the 2 min chart adding more to the divergence today with some context of course as that's very important in anchoring any expectations.

 And now the divergence has migrated to the 3 min chart which has a much sharper intraday negative in place.

And thus far, today only has migrated to the 5 min chart. Remember the process of migration of a divergence shows that there's a stronger divergence building.

Also remember that Treasuries which TLT represents, trade opposite yields so a pullback in treasuries mean a bounce in Yields and Yields have been dragging the market around by the nose.

I know there's a lot of inverse correlations there, but the bottom line is that the divergence that's strengthening in TLT could be an indication that the bounce that has tried to put itself in place a couple of times this week may be getting an extra helping hand, This is just one indicator, a pretty darn good one, but it's 1 piece of evidence.