The best indicator for US stock direction at present is the 10-year Treasury, says Ari Wald at Oppenheimer & Co. Whilst the technical picture for the S&P500 looks healthy, this can be confirmed or contested by analysis of the 10-year bond as follows:
Bullish Case: If the 10-year US Treasury yield defends 2.5% and inflects higher → banks should
rally and help propel the next leg of the market’s advance.
Bearish Case: If the 10-year US Treasury yield cascades below 2.5% → this signal of risk
aversion would be a warning for the S&P 500 as it was in 2011.