In case you missed it, Friday finished the day with a serious rally off the lows; a promising sign for the week ahead. On Thursday, I noted two important things: light volume lends to swift capital market movements and “bad news is good” due to an increased likelihood of future quantitative easing is nonsense. Friday’s action was a perfect example of both; bad news was bad and we saw both a major sell-off and a decent rally.
Today’s quantitative levels are 1353 (Oversold) and 1378 (Overbought). The momentum is behind the Bulls and this week is light on domestic economic releases, which may allow equities the room to run. Treasury yields are lower this morning and 1.67% / 1.70% is the yield the 10 Year Note needs to breach for confirmation of a sustainable equity rally.