Semiconductor breakout happening as yields try to break out higher

US Equities and Treasuries technically look to be near resistance, while the US Dollar index has begun to rally.  A majority of the major sectors are also now right near meaningful intermediate-term downtrends.  Until we can see proof of downtrends being convincingly broken across the board, I still view current levels as being a poor risk/reward for new investments without consolidation.   Near-term cycles still point to possible consolidation ahead of 12/22 before a year-end rally.  This should be led by a bounce in Yields and the US Dollar.

As discussed last week, Treasury yields look to be starting to turn back higher, and I suspect the CPI report might prove to be the catalyst for TNX getting back over 4.30%.  If this happens Tuesday, then a sharper rally in yields should commence with initial upside yield targets near 4.55%, then 4.65-4.75%.  This would likely prevent stocks from making too much further headway given recent correlation trends.  However,  Yields have indeed risen over the last few trading days and stocks thus far have not been affected.

Overall, the breakout in groups like Semiconductor sector ETF’s along with SPX and QQQ can’t be ignored and is difficult to say this doesn’t look constructive.   However, as charts below show, Equal-weighted SPX still has some work to do, and I feel that the combination of equal-weighted stock indices hitting resistance while yields turn higher might indeed prove to be a catalyst for trend reversal in the near-term. 

checkout-thomas-lee image
checkout-logo image

Become a Member To Access Fundstrat Research

Fundstrat Direct gives individual investors access to Tom Lee's research, previously only available to banks and hedge funds.

Monthly

$199/mo

First Month Free

Join Now

Annual

-15% $2,028/yr

List Price $2,388

Savings: $360/yr

Join Now

Why Join Fundstrat Direct?

Fundstrat Direct helps you invest confidently with the same research banks and hedge funds use to navigate the market.

Daily Strategy Icon

Daily Strategy from Tom Lee & Team

Stay ahead of consensus with daily updates on key developments & catalysts and opportunities ahead.

Real-Time Market Alerts Icon

Real-Time Market Alerts

Analysis on market-moving events and actionable opportunities delivered instantly from us to you.

Curated Stock Lists Icon

Curated Stock Lists

Choose the portfolio that best suits your investment style, preferred asset class, and time horizon.

Monthly Market Update & Top Ideas Webinar Icon

Monthly Market Update & Top Ideas Webinar

Attend engaging webinars with Tom & team featuring our top ideas and near-term market outlook.

Daily Technical Strategy Icon

Daily Technical Strategy

Receive tactical opportunities, actionable signals, and fundamental analysis from our proven research team.

Live Analysis on Your Holdings Icon

Live Analysis on Your Holdings

A monthly webinar featuring live analysis on member-submitted stocks and questions.

Disclosures (show)

Events

Trending tickers in our research