Will The Rising Interest Rate Crash the Stock Market?

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WYCKOFFPRO
2021-10-11

Last Friday the US 10 year treasury yield (TNX) spiked to 1.60, the highest since July 2021.

10 year treasury yield (TNX)

Based the daily chart above, $微型10年美债收益率主连 2110(10Ymain)$  broke out from the accumulation structure 2 weeks ago and tested the axis line (where the support-turned-resistance) at 1.5 followed by a shallow reaction.

Last week, TNX was on the move again and broke the swing high resistance at 1.5 and close at the recent high at 1.60.It is likely to test the previous swing high formed in March 2021 at 1.7 (as shown in the blue box).

While the10 year yield is on the rise, how does it affect the stock market? Let’s look at the NASDAQ 100 futures (NQ).

NASDAQ 100 Futures (NQ)

Firstly, why look at NASDAQ? While the 10 year yield (TNX) is rising, NASDAQ (plus other growth stocks) is generally under pressure as they tend to have an inversely proportional relationship.

Nasdaq 100 daily chart

As shown in the daily chart above, Nasdaq is still in a very well defined long term up channel since Mar 2021. So long term trend is still up.

The down wave started in 20 Sep coincided with the breakout of the 10 year treasury yield (TNX) confirmed the inversely proportional relationship between Nasdaq and the TNX.

The characteristics of the the current down wave (which is still unfolding) is similar to the one in Feb 2021 while the supply level is slightly lower (as circled in orange). Last Wednesday (6 Oct) the bull finally showed some serious action which is reflected in the hammer price action and the spike of the demand. This is further confirmed on the next two days.

The bull is now given a chance to rally up to at least testing the supply zone at 15000–15200. We need to judge the quality of the coming rally. If the bull can take over from here on, we can expect a potential re-accumulation range like Feb-Jun 2021 (as boxed up in blue).

Instead of having a market crash, a re-accumulation is what I anticipate while the rotation is on-going to benefit the small cap (Russell 2000) as I mentioned in the past 3 weeks.

Let’s pay close attention to the characteristics of the price action (with the volume) in the coming week and to trade accordingly. Meanwhile, we canfocus on the Financial ETF as the 10 year yield is risingbecause there are quite a number of the stocks in a great position to start the markup phase.

Safe trading :) If you are day trading the US futures or swing trading for Malaysia and US stocks, do check out my YouTube Channel: Ming Jong Tey for additional videos and resources. $苹果(AAPL)$ $阿里巴巴(BABA)$ $特斯拉(TSLA)$ $英伟达(NVDA)$ @Tiger Stars 

Further Reading

Failed Breakout in AAPL — Change is coming for Apple Stock (What should Investor and Trader do?)

The two proxies to confirm the super bull run

# 炒股技术派

免责声明：上述内容仅代表发帖人个人观点，不构成本平台的任何投资建议。

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评论（335）

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  • BleuNovember
    ·2021-10-11
    there is a difference between the interest rate and the t yield. and it is not just the t yield rising. it is the steepening of it. did you mean the rising T Yield?
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    • WYCKOFFPRO: 
      the 10 year yield is an important benchmark that influences many other interest rates,e.g mortgage, borrowing, etc...
      2021-10-11
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  • IcySilver
    ·2021-10-11
    Waiting for good trade entry $Bank of America(BAC)$
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  • JeremyKok
    ·2021-10-11
    today, US market went up at the start but end lower is it due to interest rate increase? there are many factors that will cause a crash. a combination happening for months will cause a major crash.
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  • Slowdownpok
    ·2021-10-12
    It definitely will influence investors. However, if interest raise; it will beneift banks or finance. Can look out those companies strong in virtual banks area as it is growth area.
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  • Upswing118
    ·2021-10-12
    If quality stocks have enough $, then shd not be impacted much.
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    • KH321: 
      OK
      2021-10-12
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    • bernardtayet: 
      Absolutely true
      2021-10-12
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  • winsolutions
    ·2021-10-11
    it will affect the mkt, but will not crush the mkt as yet. maybe a while later. so correction is gd time to speculate.
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  • 逢股必赢
    ·2021-10-13
    A lot more unpredictable market situation than few quarters due to supply chain crunch, interest hike, early buy back of bonds, China energy crisis etc
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    • Cockatoo: 
      Agree
      2021-10-13
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  • henglaw
    ·2021-10-12
    The market will react to it. Stay vested.
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  • Juanlee
    ·2021-10-11
    The Fed can only keep faking data to kill time but cannot raise interest rate because it will increase the national debt interest  bill that the government  cannot tolerate.
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  • AshlynCasper
    ·2021-10-12
    Fingers crossed
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    • xnubx: 
      [晕]
      2021-10-12
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  • DreamyLucid
    ·2021-10-12
    TNX spiked on poor NFP data. But at +100K, its enough for Powell to announce taper on bond buying in November.
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  • PowerUP
    ·2021-10-11
    aug crash sep crash oct crash... all cash out better play what
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  • Venture118f
    ·2021-10-12
    I wish it will … so I can buy into FANNG some counterS … have been waiting too long alr [Facepalm][Facepalm][Facepalm]
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  • 27098bda
    ·2021-10-12
    good stuff
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  • blkgoat00
    ·2021-10-13
    [得意] [财迷] [财迷]
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  • sseregit
    ·2021-10-20
    If raise interest, profit reduce8, biz slow, ... If don't raise, inflation will increase.... So how?
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  • FollowSnail
    ·2021-10-13
    interest rise to cool down the market!
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  • daryltan526
    ·2021-10-13
    heng ong huat bro
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  • trace10
    ·2021-10-12
    Interesting [思考]
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  • angstg
    ·2021-10-21
    Newton’s law. What goes up, must comes down.
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    • KyawGyee: 
      Which law of Newton say it?
      2021-10-23
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