A Slip 'N Slide Setup

After an auspicious open for bulls on the back of TSLA and TXN earnings rallies, stocks look to finally be noticing the stickiness in rates as we fade into late-morning. 

As I write this I see that rates on the 10-Year are above 4.65% and have 4.7% as the next near-term breakout level within shot. In addition, it is hard not to think that 5% is attainable within a relatively short period of time given how many folks are either flat-out ignoring rates or assuming they will reverse down any day now. 

In reality, Treasuries (using TLT ETF as a proxy, below on the daily chart, inverse to rates) are hanging on by a thread and look as though they are on the cusp of a Slip 'N Slide move much lower which, of course, would spike rates higher in a much more ferocious manner than anything we have see up to this point. 

Once again, the amount of bottom-calls and sheer bullishness which has accompanied the rally in stocks this week rivals almost anything I have seen in 2024, in terms of sentiment. And, yet, all the rally has done is take the SMH up to prior broken support, and TSLA is clearly still in a steep downtrend with tons of likely overhead supply. 

The net result is that because rates remain the focal point of my overall view of markets and asset classes, I am looking for this rally to be a failed one in equities leading to summer volatility, at a minimum. 

META and CMG report tonight, which is interesting since they have two of the steepest charts on long-term bases in the entire market among larger cap names. After TSLA last evening, NFLX's selloff seems like a distant memory from last week. However, I suspect NFLX will prove to be the true omen of this earnings season rather than Tesla.