Option Investor
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Stock futures point to strong open

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With some signs of election results coming to a close, perhaps by this weekend, stock futures are surging this morning. S&P futures are higher by 20, NASDAQ futures are up 95 and Dow futures have jumped higher by 100 points.

Economic data has some selling treasuries

There were no big surprises in this morning's non-farm payroll numbers, but wages did come in a little higher than expected. This has some traders selling treasuries this morning and this should help readers of our comments over the past couple of weeks get a feeling that this type of movement in the bond market is a good sign. We'll see what happens when the markets open at 09:30 EST, but things look very good currently.

30-year Treasury Yield - 60-minute chart

The 30-year Treasury yield (TYX.X) has yet to reach or target yield of 5.475%, but it came very close yesterday. Our first level of resistance for yield looks to be the 50-period MA near 5.60% and this corresponds nicely with a downward trend of resistance (support for price). Traders will also want to monitor our longer-term resistance level near 5.825%. We want to monitor this level as some institutions are looking at that as a potential risk/reward level for making buy stocks/sell bonds decisions. If they feel there's currently less risk in stocks than there is in bonds, we should monitor yields to get inside their heads. Some of the key indicators we follow for monitoring risk support this type of thinking.

-Staff Analyst

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