Broader market responding positively to Treasury yield Drop

Stocks should be near a trading bottom following a difficult couple weeks for the US Equity market.  While Technology’s outperformance has disguised some of this recent selling pressure across multiple sectors, recent weakness hasn’t proven too extreme and should be nearing a low.   US Treasuries and US Dollar both should be on the verge of turning down more sharply in the days/weeks ahead which might coincide with less inflationary economic data over the next couple weeks.  (May proved to be the best month for Treasuries all year.)  However, until further economic weakness leads yields lower, it’s difficult to make a compelling case that a broadening out in the equity rally is imminent.    Overall, bullish June seasonality combined with a cyclical bottom following lack of material technical deterioration spells opportunity for US Equities in the month of June.

Friday marked the completion of what was viewed as a very unusual month for risk assets.  Early month gains gave way to back month weakness across the board that largely coincided with the bearish dip seen in the cycle composite.

Despite some minor backing and filling, the selling, however, didn’t seem too serious for a number of different reasons:

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