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Bulls find "horn of plenty" day after Thanksgiving

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For whatever reason, stocks have had a history of bullish performance the day after Thanksgiving. There are several explanations. I've felt for some time that it is the lack of "senior" traders in the office that has the markets trading higher the day after Thanksgiving. Perhaps it is just bears going into hibernation after a good meal the day before. Regardless, today had bulls finding their horn of plenty.

The markets are now closed at 01:00 PM EST and its time to turn off the news channel and flip over to the football game. Before we do that, lets see if anything "significant" took place today.

While the bond market action today wasn't perhaps the "most interesting" thing that took place today, we did see a complete turnaround in trading there from this morning. At the opening of trading in the stock market, bond YIELDS were lower across the board. As the session progressed, we started to see some selling in the longer-end of the bond market and eventually spilled over to the shorter maturities. By day's end, the bond bears had won.

This leaves the 10-year YIELD ($TNX.X) right near its 200-day moving average and something I'm watching closely. The technicals (based on the 200-day MA) are quite similar to what we found earlier this spring.

10-year YIELD chart -

Today's action in the bond market wasn't all that exciting, but traders managed to peg the YIELD near today's close right at the 200-day moving average. Over the next couple of weeks we'll want to monitor things closely here. It sure seems like stocks moved ahead of YIELD this past two weeks, but YIELDS have sure turned around and followed stocks higher.

The sharp move above downward trend last week looks to have had a lot more conviction of sellers behind it that that break of trend back in April.

Should we continue to see an unwinding in bond YIELDS from here and a move above the 5.14% level on the 10-year that action could lend to further bullishness for stocks. If nothing else, the cash raised from that type of move may then be slated for stocks should a pullback in the equity markets occur.

Today was a trade-shortened day due to the holiday. The markets closed at 01:00 PM EST.

Have a great weekend and put some extra mayo on that turkey sandwich for me!

Jeff Bailey
Senior Market Technician
Option Investor

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