Defensive groups not offering much Safety as stocks and bond yields break down in tandem

Over the last few days it’s been discussed how markets were nearing resistance.  Yet, is it correct to think that “bad news” was truly bad news for stocks if rates are breaking down?  It’s been difficult to fight the trend of falling yields being good for Equities, and one day of divergence is hardly enough to think this trend is breaking down. 

Additionally, Defensive sectors like Consumer Staples and Utilities lagged all other sectors in Wednesday’s trading.  It’s been difficult to have conviction that stocks might be ready to weaken if/when Staples hits new multi-week lows coinciding with rates also weakening further.

Importantly, despite breadth not disappointing too meaningfully, volume was very heavy in downside issues, resulting in an Arms index ($TRIN) reading above 2.0.  Normally readings like these which happen following a multi-day or multi-week rally are more negative, than when they happen following a lengthy decline when they’re more apt to signal downside capitulation/exhaustion.

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