Since December start:

• $SPX is off 12.46%
• $DJIA is off 12.10%
• $NASDAQ is off 13.60%

Previous support in the 2600-2650 level on $SPX failed.

Sentiment is changing.

While the saying that Markets have predicted 10 of the last 3 recessions is a truism, as sentiment changes, recessions become more likely to emerge. Not to mention at the end of a 9 year business cycle.

While equities are looking increasingly gloomy, Treasuries have captured some flows.

Since December start the 10Y yield has decreased from roughly 3% to 2.782% at Fridays close (falling yields means demand for bonds). In the big picture we can see that 10Y yields are testing the recent (3 year) uptrend.

Further weakness in the equity markets could mean more aggregate demand for treasuries (“safe” assets) and lower yields. I will be watching to see how treasuries trade form here.

Just a quick post.

Happy holidays.. if anyone is reading 🙂