Stocks turned sharply lower in the last 12 hours based on 10-year U.S. T-Notes and the correlation with the E-mini S&P 500. Key for that move down was a breakout of an ending diagonal seen on the 10-year, which was a confirmation for a turn into a risk-off mode for stocks.
As clearly observable since no later than early last week, directional trend moves were lapsing into consolidation phases. And with those come a degree of consternation. While it might seem that the less directional trends might leave a more subdued psychology, the memory of the more aggressive trends leave many market participants on edge. That is often due to the degree to which there is concern over not missing the next major price move in spite of the current lower volatility.
We have seen the U.S. dollar moving to the upside in the last 12 hours, following the hawkish tone of the FOMC minutes that send the U.S. 10-year Treasury yields rising to 3%. We see 10-year U.S. T-Note prices still in an ending diagonal.