On October 5, 2018 the 10-Yr note interest rate closed within range of the 127.20% Fibonacci value in the first chart structure shown below before turning and starting a decline. On October 5, 2023 the 10-Yr note interest rate closed above the 127.20% Fibonacci value in the second chart structure shown below. The two charts carry a similar underlying characteristic based on 10-Yr Non-Commercial futures trader’s positions shown in the third chart below. This type of interest rate positioning by futures traders indicates a quick move down (minimum of 5%) in the S&P500 is expected.
Similar readings were received in the 10-Yr Non-Commercial futures trader’s positions on June 29, 2004 and April 13, 2010. After June 29, 2004 the S&P500 dropped 6.2%. After April 13, 2010 the S&P500 moved sideways until May 4, 2010 when a “flash crash” occurred leading to a 5.6% decline in May 2010.
As of October 7, 2023, the S&P500 started a quick consolidation phase prior to moving higher. This could change quickly with a sharp decline, which appears to be what is expected by bond traders. Additional trading data will be needed to determine a change of direction.
Stock charts courtesy of StockCharts.com.
