We said the two-year had stopped working. Then we said it had started again. On Tuesday it closed at 4.17%, below the floor of both stories, and the thing that moved it was the price of oil.
...The inside bar called 5 markets overnight. RUT took both sides, the Dow took the high, ES and NQ took the lows first, crude broke and trended, and BTC broke low and faked it. Inside: why break and trend and break and fake are not the same trade, and the SPX bands squeezing again with the 3 day average around 50 points.
...For four sessions the 2-year did not move and I said it had stopped working as a price. On Friday it moved 5bp and held. Here is what that might mean, and where I might be wrong.
...The 2-year sat at 4.19% for four straight sessions through a buyback shock and hawkish minutes. Then it printed 4.24% twice. Bitcoin took 80,000 and nobody looked at the boring number.
...RUT did the job SPX normally does. SPX did not. And the final 10 minutes of the session settled both of them at once.
Two trades to start the week off with.
...An inside day to finish Friday sets us up for a pop out of the narrow range, and on stock indexes the side that breaks first is often the false one. The move in was bearish, so that is bear continuation 65 to 70% of the time. Inside: why crude does not play the same trick, and the VIX line I am still watching for.
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