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5-year YIELD at 52-week low

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The recent round of weaker than forecasted economic data has Treasuries seeing a third session of strong buying and the shorter-term 5-year Treasury YIELD ($FVX.X) 3.206% falling to a new 52-week low. This is a signal that the MARKET is very defensive.

As such, I'm rolling down my retracement bracket in the 5-year YIELDS to try and identify potential levels of technical support on this YIELD and using the bearish vertical count from the point and figure chart, which currently calculates at 2.7% to anchor the base of my retracement.

5-year YIELD Chart - Daily Interval

Cash is really flowing back into Treasuries for the third straight session and this is a sign that the MARKET is beginning to believe the U.S. economy is headed for a "double-dip recession."

As such, stocks are trading lower. Here's a quick look at our "Balanced Benchmark" portfolio of various assets.

Balanced Benchmark Portfolio - From 07/31/02 close

The US Dollar Index (dx00y) 106.65 -0.34% is weak for the second straight session and hints that some foreign capital may be slowly trickling out of the U.S. once again. Treasuries among the various maturities are seeing price gains and so are some of the higher-grade corporates that offer some higher YIELDS. Just like yesterday, we're seeing the "riskier" tech laden NASDAQ-100 Trust (QQQ) $22.17 -2.46% lead an equity decline.

Jeff Bailey
Senior Market Technician
Option Investor

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