Traders should be keeping an eye on bond yields and I just want to remind you to look at both the daily and hourly intervals. Both of these charts have a key moving average that could determine where things go over the next several trading sessions.
10-year Treasury YIELD Chart - last eleven months.
Traders should continue to be monitoring bond yields as well as the stocks they're trading on different timeframes. This morning, we looked at the 10-year YIELD (TNX.X) on the 60-minute time frame. The above chart is gives us a different look of how the 50-DAY MA could come into play at 52.21 or 5.221%.
NASDAQ Composite Index Chart - 60-minute interval.
Traders that will review this morning's commentary at 09:00 EST and the 60-minute chart of the TNX.X you can begin to see how a move above the 50-period MA on the TNX.X might get the NASDAQ Composite (COMPX) back up near 2,758. If we have an idea of where things might be headed short-term, we can trade accordingly. At the same time, we then understand what your risks are for bullish trades as we can now identify various support levels. Currently, I'd say bullish trades have support down to 2,600. Bearish traders who may want to get "short" ahead of Cisco Systems earnings (NASDAQ:CSCO) will be risking a move in the NASDAQ above 2,892 if they short near the 50-period.
Be careful what and where you short!
Last week we started building a list of short candidates. One of the stocks on our "Watch List" was Microsoft (NASDAQ:MSFT). Our trading plan called for a short below $60 and that alert was NEVER triggered. By setting a disciplined level for a breakdown (that was never triggered) that discipline kept us out of a losing trade. Conversely, we had identified shares of CSCO as a short on Friday and took $3 out of a bearish trade in that stock yesterday morning. When our target was achieved, we moved in and booked the profits. Both trades called for a plan to be followed and both plans worked to our advantage. Plan your trades and trade your plans.