The broader market stock averages have given back some of their early session gains and Treasury YIELDS have reversed into the red this morning. The 5-year YIELD ($FVX.X) has violated yesterday's low and I view this as a near-term negative as the MARKET appears to be getting more aggressive with their buying in this bond.
5-year YIELD Chart -
On Friday, the break below the 4.076% level had us turning cautious toward stocks. On Monday, that may have helped some traders as stocks did trade lower. The recent decline in the YIELD on the 5-year is that of more aggressive buying taking place in the past 3 sessions. We will want to monitor the 3.918% YIELD level as a level where we might start seeing this bond lose some of it's aggressive buyers. Equity bulls looking for some strong stocks on pullbacks may want to correlate their trades with the action taking place in the 5-year. It sure looks to me as if the bond MARKET began buying the 5-year at the higher 4.35% YIELD back on 11/21/01 and it hasn't been until the last 4 sessions that the action there has gotten more aggressive. If the economy is truly turning a corner longer-term, we should see some YIELD support action begin to take place at the 3.9% level or rising 50-day MA at 3.84%.