Bullish Double Barrel Action as Market Breadth Breaks Out and Bond Yields Break Below Key Support

The Intermediate Term Trend is Up Until Something Happens

The New York Stock Exchange Advance Decline line (NYAD) is making a new high this morning, breaking out after its recent consolidation pattern as the U.S. Ten Year Note Yield (TNX) is steadily falling. This double barrel action is providing a bullish backdrop for stocks, until proven otherwise.

It’s hard to argue with the upward momentum in NYAD, which is accompanied by a flattening out of the CBOE Volatility Index (VIX).  Combined, these two indicators are very constructive as they suggest money is flowing into stocks.

For its part, this morning’s yield decline came in response to a higher than expected number of jobless claims.  That’s the second consecutive sign, after last week’s worse than expected NFP number that the labor market is slowing.

The take home message on bonds is that 4.5% is becoming a resistance point. 

The bullish market tone is being reflected in the three open trades which I’m updating below.