Today's action in the bond market is very much like that found in the stock market. Only thing different is my early analysis that the bond market "liked" today's economic data, while stock investors didn't. While today is just one day, the action in the 10-year Treasury has me remaining bullish for stocks longer-term. Each day is a test.
Today's bond market action should not be an excuse for an equity trader to lift his/her stops on their trades. Instead, I'm using it as a reason to be looking for stocks to buy that pull back to a level of support.
Bond YIELDS at 12:30 EST
Bond YIELDS have really reversed their earlier trading and this reversal has me believing that bond traders actually liked the economic data. Talk among Treasury traders is that today's retail sales number was indeed weak, but combined with previous months numbers, the numbers looked fine. With cash freeing up among these Treasuries, it's got to be slated for something else!
Oil Service Index Chart
Oil service stocks have been hammered in the past year. The slower economic environment and decreased usage of oil and natural gas has put the group under pressure. While economic data is showing some signs of improvement or stability (we can all argue this) there's an upward trend developing in the Oil Service Index (OSX.X). If you're looking for a group to at least monitor going forward to get a feel for the MARKET'S perception of potential economic growth, here one to follow.
Last week we mentioned shares of BJ Services (NYSE:BJS) as a stock to keep an eye on near $30. The relative strength chart for that stock was outperforming both the sector and the broader S&P 500 Index (SPX.X).
BJ Service Chart -
On December 5th, shares of BJ Services (NYSE:BJS) made a bold move above its rounding 200-day MA on volume of 4.8 million shares. We pointed out the stock had also just broken a long- term bearish trend on its point and figure chart. The stock is trading in unison with the higher bond YIELDS today and hints that this stock and perhaps the group is a benefactor of the bond market's perception of an economic turnaround.