As noted in all of our recent analysis, the fundamental backdrop was just not consistent with any orderly push higher in U.S. interest rates triggering a sharp reversal of the U.S. equities' major bull trend. Of course, that still meant after the U.S. 10-year T-note yield swung above its 2.62% four-year high back on Jan. 19 (incidentally the same day as our Showdown at Govvies Graveyard post) the higher interest rates might disrupt the U.S. equities’ runaway upside (parabolic rally) psychology.
It's been quite a tumultuous week in the markets, as we all know, but something seems amiss.....on Thursday when the Bank of England's Mark Carney talked about raising rates faster than expected, the pound popped (as one would expect) but it did not take even a few hours for it to completely reverse trend as if nothing happened, and the USD was back to being strong again. The speed of reversal was quite strange!
The forthcoming trading week should be less exciting than this week, as the range math for many markets, many symbols of which may be opening near weekly lows, will likely facilitate sideways pricing more so than trending trades. That said, there may be some carryover trending character in the early part of the week before sideways pivot math and ranges that markets may need to digest set in place.