As the 10-year pushes past 3%, we’re left to wonder whether flows will begin to favor bonds again.  In a world of 2.5% inflation, bonds might seem like a sucker’s bet.  In a world of 8-10% inflation, even more so.Yet, we often buy instruments with little long-term value but plenty of short- or medium-term appreciation potential.  The 10-year is at an important inflection point, poised between a strong rebound and a significant selloff.  Its next moves are critical not only from an investment standpoint, but in terms of what to expect from the broader economy.continued for members…VIX continues to play cat and mouse with the purple channel.

While TNX takes its foot off the accelerator…...DXY officially reaches the .786.RUT reaches new highs… …but SPX remains subdued — seemingly biding its time (safely above the 2.24 – for now.)Could the COMP SMA200 still be a primary consideration?In short, nothing has really changed for the past 3 days. I suspect we’ll get a nice little selloff on Monday-Wednesday next week in order to achieve the COMP backtest.

I have to be out of the office this morning, should be back by 12:30 or so.

GLTA.

UPDATE:  3:50 PM

I wish I had something stunning to report.  I look at SPX hanging just above the 2.24 Fib and it truly strikes me as in a deliberate holding pattern.  If so, for what purpose?

I still like the COMP SMA200 premise, which these days points to SPX 2545. COMP’s SMA200 is currently rising about 5 points per day.  Note that it just completed a Gartley Pattern at the .786 Fib.

In terms of parity, COMP was much more buoyant during the second big drop — therein the problem.  It rebounded more strongly, also, which compounded the problem.  Bottom line, it smells like a big drop coming as soon as Monday.

Could USDJPY, which just reached its .618, play a part?  A backtest of the Fib fan line and .382 would make sense — with a rally up to 111.76 to take the edge off once the drop is done.It goes without saying that CL and RB could also facilitate such a drop.