 Hey everyone, this is Mike Kramer of Mock Capital checking in today is Tuesday October 17th It's around six o'clock in New York time US markets are closed So today was a very busy day inequities and in rates Actually the last couple of days have been very interesting because the market the equity market seems to really can't Can't really find a sense of direction while, you know rates are currently moving higher and The dollar's been sort of fluctuating and so today's retail sales data certainly came in Hotter than expected and that certainly caused rates to move sharply higher Especially, I mean really across the entire curve the two-year rate Closed at a new cycle high today reaching, you know as high as five and a quarter percent and so this is almost implying that the market is now At least considering the fact that the Fed may be looking to maybe raise rates another time Before this cycle of rate hikes is over and that's what this movement in the two years would suggest I don't know that there's really much upside here beyond let's say 5.3 percent 5.3 percent is a Level that you know, we would have to go back Many years to go and find but here it is right here. So going back to June of 06 So Given that we don't have enough information to say that the Fed is gonna raise rates more than one more time I think at this point we need to think that the two years probably capped Around this five and a quarter to five thirty level now what may not be capped is obviously the ten-year rate Because you can see that it looks like there's a bull flag that formed here And then we broke out of it and really moved sharply higher Today increasing by another 13 basis points to move up to a new closing cycle high at four point eight four percent call it and At this point, you know, we can clearly see that the RSI is not an overbought territory The Bollinger ban were certainly not as overbought as we were back at these points in time If this is a bull flag, then we could surmise from it that there's probably more upside And really once we take this 490 level out call it on the ten-year Like the two-year we would have to go back many years to really find the next major level of resistance And that comes somewhere around five and a quarter percent and you know when we just do an extension off of this pattern We could probably we get about the same Distance and if we do it from a more conservative basis, you could see a 100% extension takes you somewhere to around 520 so it's Given where the front of the curve is given where the How the yield curve inversion is at this point in time? Given that we know that it's likely that we can see the back of the curve continue to rise in the front of the curve Stay sort of stagnant. It seems possible that you could see the ten-year rise Another 25 basis points and that would really only take you back to around zero And we can see that this area around negative 35 basis points is a level of Consolidation for the 10 to curve and so a break above this I think would certainly be a sign that the tenure is Heading significantly higher. It's also worth pointing out that on the 30-year When you do it minus the the three-month Treasury You can see that this is also at a port and level an important point Which could suggest that the 30-year is also going to be making another run higher potentially moving Above this high again. This has a similar, you know, bull flag type structure in it again like the ten-year not really Overbought at this point in time and would suggest that there's still room for this to go up from here Now this is Now this is important because if we can think about where rates are going to go Maybe we can figure out where the equity market's going to go and in fact when we look at the S&P 500 futures and we overlay it with the ten-year Treasury futures at least going back to July the two have been moving side by side. They've been basically mimicking each other and When we go back and look further in time this relationship actually started some time ago If we go back all the way to the top here You can see that you know as the market was basically falling rates were rising and but the pattern grew stronger It would seem This summer When we got to this point in time, you can see it got much more more correlated and certainly you could see off of these lows as well as This price was moving higher price has been moving with price There was a separation right in here But again, this is what we're generally seeing at this point in time and so This really kind of gives us a little bit of a clue maybe in terms of what's Next in the equity market and at least when we look at it from a more short-term point of view You can see that price of the ten-year Treasury rate has moved down sharply The equity market so far has held up. I would say it's not entirely common to see this because we've seen this before where Equity price has moved higher at the middle end of July ten-year rates were moving ten-year prices were moving down Again, you saw a ten-year price is moving down Stock price is moving higher and this persisted for you know a few days July 24th And then really equities didn't start turning down until August 1st the full week Here you can see again September 7th And equities didn't really start turning down for a full week and here if we look here We're October 12th, and so we're coming up about on a full week And so it may be actually within the next day or two So it could very well be the case that there's still another leg lower here coming for equities Which would again if this is a path and a sign for what's to come This would suggest that we're gonna get back to these lows and maybe Undercut it when we look at the S&P 500 futures When we look at the cash market, we look at the cash market a couple of things stand out really quickly on the S&P 500 We have what looks like some sort of Triangle pattern here. You could argue maybe it's a Rising wedge to some degree, but what I think is interesting more So is that this pattern really resembles this pattern? But this instead of there being a head here it kind of dips down and then it completes So again this you can see the three legs up You can see the head the shoulder and the head here. You can see the three legs up You can see a shoulder an indention another shoulder And so it makes you wonder again is the next leg going to be lower here returning us to this level We've seen this similar thing happen now on a number of occasions Here you can see we had the three legs up and then you had this Consolidation with the exit Again, even when you go back into this period of time you see the three legs up the consolidation And then the exit so again this looks similar to that with the three legs up The only thing that's sort of confusing here is that you don't really have this same head-looking structure But when you look at the NASDAQ you can clearly see that there is that same structure You can see there was a three legs up with this head in the shoulders and now Perhaps potentially suggesting we move lower again. You would need to break 14,990 for that to really be confirmed and then I would be looking for 14,700 likewise This is a resistance level up at this red line around 15,300 this dates back to the highs back in the middle of July So again, that's sort of a similar pattern again what we've seen in the past so This these patterns are Suggestive along with the price action we've seen in rates That we probably return to these lows when we look at the Dow It's also not really giving us a clear indication What is clear here though is when we look at the Dow There's a channel that's rising typically when you get Rising flags. This is not a bull flag. These are usually corrective flags Typically you see a reversal and a return to the lower end of it This is just typically what these rising flags do. It doesn't mean it has to happen But again, my guess would be is that if you were to take out the 34,170 level You're then talking about opportunities to rise back to this trend line Which is something that dates back to the to this level in June Likewise, if this does end up breaking and you fill this gap here at 33,560 It probably means you're going to see a return to this 32,900 level and again given The patterns given the price correlation we're seeing That would be one that would be suggestive that we see these lower these lower movements When we just go back to the futures really quickly again We can also see that the dollar is having a lot of influence over Where these prices are going and you can see that when we take the Canadian dollar and Instead of looking at it up this way we invert it you can see that this is also having some influence over where prices of stocks are going and Again, not perfect But again, if we can figure out Generally the sense that the dollar is going to be getting stronger and that the Canadian dollar this Canadian dollar USDCAD is going to be rising then this would also suggest that we would see lower Stock prices to come so these are just some tools that you could maybe put to use that could give you a little bit of an edge As people try to figure out what's happening in the market When we swing over to the DAX, I don't have any neat Relationships to show you here, but again, here's your your trend line that we've been tracing out and following Here was an attempt to break out. We failed and then we moved down here was an attempt to break out We failed and we moved down What's interesting is that when this happened we took out these lows and made a new low So far all we've done is gotten back to the prior lows, basically the question is whether or not we're going to make a new low and test this 14,800 level. I mean certainly when you look at the DAX, it's not oversold. It's not oversold on the Bollinger Band It's not oversold on the RSI There is clearly some resistance here at 15,300. There's also very strong resistance up here around 15,570 When we look at the overall Structure of this move here, you can see that there's an impulsive move down You could say one, two, three, four, five and then this looks like Maybe a five with an A and a B and maybe there's another C wave coming Which would again maybe suggest we rally and test this level of resistance at 15,580 While a drop of below this 15,140 level I think opens the door to a retest of this low and potentially a Break again overall this looks like a bit of a distribution pattern Which would also suggest maybe we have another leg lower coming The FTSE has been fairly resilient compared to the other markets The FTSE, you know again broke this trend line. Here's your uptrend in it We came down broke the uptrend. We broke the downtrend Came back into it got down to the 7,380 area came back up and so far we haven't been able to get through 7,700 but this is actually held up fairly well and Again like the other indices. We're not really seeing Signs of an index that's overbought and that would suggest that you know Maybe the FTSE can continue to rally if it can break above this 7,680 zone because even if you extend this trend line up, you know You can see that you can get you can get somewhat higher into the mid 7,750s or so before you really have to worry about this trend line and We should move it over and again there wouldn't be resistance until 7,740 or so At least in this case you have a trend that's moving higher Again, there is some consolidation here But the difference I think between this and what we're seeing on the more hourly chart on the S&P is that This chart has been consolidating now for a really long period of time and this looks more like potentially base building than it looks like a Consolidation with it with an angle or tilt maybe moving lower But again, you just have to continue to keep an eye on all of this and watch how these levels break down And you know again, I think ultimately speaking if you begin to see, you know I think that these markets are being very heavily influenced by changes in currency exchange rates and in and basically in interest rates as well and so you know because those are all going to ultimately affect earnings and such and Financial conditions and liquidity. So this are some of the things that I've been looking at some of the areas where I think that these markets may be heading Anyway, hope you have a great rest of your day, and we'll see you soon. Bye