A Critical Market Shift: Bullish Patterns Emerging

TNX Falls off of a Cliff

The market has been awash with fear over the bank crisis, and rightly so. Insolvent banks should concern people. But, the irony of the situation is that it caused the 10-year treasury note to tank, opening up the door for previously weak tech stocks to rally.

Check out a daily chart of the 10-year treasury index below:

Before the Silicon Valley Bank collapse, the 10-year was on a very bullish path to new, all-time highs. With the Federal Reserve’s quantitative tightening campaign, that was the intention.

Mortgage rates were headed to November highs, and interest rates along with them. But, something changed when the domino effect of SVB bank began. TNX quickly shifted from a bullish to a bearish trend. Mortgage rates came down over the last two weeks, and buyers came out of the woodwork, with many homes going pending based on my frequent usage of Redfin (RDFN) and Zillow (Z).

Could we have seen this coming? No. Can we trade it? Absolutely!

Equity Impacts

The Nasdaq daily squeeze fired to the long side, and the move was strong enough to ever so slightly break above the February highs. Breaking above February highs is critical because this is a crucial area of resistance and a critical zone that fundamentally shifts this trend. The January/February 2023 rally was predicated based on the run into earnings in January, and by all accounts, was incredibly strong and historical.

Once the market started pulling back in typical FAANG-over fashion, it easily could have gone to new lows. But, SVB went belly up, and tech flipped on a dime.

Check out the daily chart of the Nasdaq Futures below:


Now What?

So, where do we go from here? Right now, the Nasdaq is creeping through previous highs, and market leaders Microsoft (MSFT) and Apple (AAPL) have gapped through critical resistance zones. I stopped by StockChartsTV to discuss all of this and more, along with one of my favorite longs right now.

Check out the video to learn more about My Daily Five on StockChartsTV below:

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