But What If We're Wrong?

Money coming out of Bonds and flowing into risk assets like Stocks and Currencies like Aussie Dollar have been the story over the past year.

Changes in these trends need to be monitored.

What's going to stop rates from rising and potentially give bonds a bid?

Well, that 1.4% level on 10s is quickly approaching:

If there was a ever going to be a time for a pause, this would be one.

Looking at US 5-yr Yields, those former "support" levels (resistance in bonds) haven't mattered. So why would it matter in 10s?

I don't know. But we're keeping an open mind and we'll certainly be watching.

Another big one is probably what's happening in shares of Amazon, which represents 22.5% of the entire Consumer Discretionary Index.

With a bearish momentum divergence and bearish relative strength divergence, the stock is certainly vulnerable.

A breakdown from this consolidation in price combined with new relative lows is a pretty terrible combination for $AMZN longs, and for investors with long exposure in Consumer Discretionaries.

We see similar vulnerabilities in Facebook, which represents over 20% of the Communications Index:

Both of these can continue to work off these potential divergences though time.

That's classic behavior in uptrends.

Or they can complete these resolutions lower, which would be information.

If names like $FB and $AMZN start falling apart, that's just not consistent with a lot of the other things we're seeing out there.

So if you ask me, "What if we're wrong? What do we do then?", I'd say that we want to anticipate being wrong and think through what that world would look like in that scenario.

For my money, if stocks are selling off, Aussie and 10yr yields are probably rolling over, we're getting a bid in bonds and $AMZN and $FB are most likely resolving these consolidations lower.

We'll probably also see a whole slew of other evidence pointing to similar damage being done.

And of course, I'll be right here talking about it and taking questions.

So let's get it!