MacNeil Curry over at $BAC/ML is one of the best in the business. He was one of my early mentors when I first started learning Technical Analysis back in the day.
“Bank of America Merrill Lynch’s MacNeil Curry writes Thursday that investors should watch the $VIX “for signs of investor capitulation. Until it spikes north of 50, the risk off environment will persist.” On Thursday, the $VIX surged 6% to 39.64.
Yields on the 10-year Treasury yield are now cleared for a long-term target of 1.52%, Curry writes. The 10-year note yield is down 8 basis points at 1.77%. $TNX”
From Current levels, the $VIX would have to go up another 20% before reaching Mr. Curry’s target of 50. From these statements above, he is making it clear that the risk-off environment is far from over. Treasury yields and stocks have been positively correlated here, so further downside in yields should take stocks much lower as well.
Here are the charts from the past decade: