There's that "rising yield is good for stocks" thing again. Traders that fully understand how a rising yield can be good for stocks may have taken notice in the past hour when the 5-year note (FVX.X) broke above yesterday's YIELD high. This was a "heads up" for bullish traders.
5-year Treasury Note YIELD Chart - 60-minute interval.
A break above 48.57 (4.857%) could have gotten some institutional traders off their offers as selling picked up in the 5-year bond, thus a rising yield. Where will those participants who begin selling bonds (resulting in higher yield) go? What about stocks? If I'm a market maker or institutional trader, I might want to back off of my offer and let the stock I've got inventory in move higher, wouldn't I?
NASDAQ Composite Chart - 60-minute interval.
Looks good here. NASDAQ moving higher and 2,900 doesn't look out of the question. Let's not pull any punches and take a look at a stock that was highlighted on January 18th at $15.50.
American Power Conversion Chart - 60-minute interval.
You've got to be kidding. Maybe there is something to this rising yield stuff. That seller we identified at $17 looks to have been overcome buy a buyer (perhaps the buyer was watching yield too) in the form of about 2,000,000 shares in a fairly quick time frame. That's not you or I buying APCC, that's an institution.
VeriSign Chart - 60-minute interval.
I've gotten several e-mails from readers asking if it's time for VeriSign (NASDAQ:VRSN) again. I'd say not unless you think the NASDAQ Composite is going straight to 3,000. We made good money in a long on VRSN from $82.50 to $97, then lost $2 from $86 to $84. Now the stock is trading below all kinds of trends and moving averages. These are the types of stocks where you can end up sitting in for days as a broad market rally leaves you behind. Currently, there's nothing technical in VRSN that interests me in the least. The company is expected to report earnings in the days ahead and it sure doesn't look like the MARKET expects much. There's got to be better stocks than this one to be looking long for. Now watch it go back to $90. I "preach" the trend is your friend a lot and this one doesn't have a friendly trend that I can find.
Yes, there are other stocks that are moving
Hopefully readers realize that we could probably talk about the four charts shown above every day and still get a market update. By showing charts of APCC and VRSN, hopefully readers understand that I'm NOT "picking and choosing" 50 different stocks and selectively pointing to those that "make my case." Yes, I liked VRSN at one point, but when I lost money and the stock continued lower, I now feel I need to move on and trade bullish in other stocks that will treat me better. There will come a time to trade VRSN bullishly again, but the odds of making money just don't outweigh the risks or current trends. When the stock looks better we can trade bullishly again, but capital is limited and we want to be trading in technically strong stocks.