Could the Staples sector and the yield on the 10-year note be on the verge of sending an important message to the stock and bond markets? It sure looks that way.
Staples ETF (NYSE:XLP) is currently attempting to break above the January 2018 highs at (1). If it does, it would be a breakout of the trading range that has been in play for the past 18-months, as it looks to have created a double bottom last year.
The yield on the 10-year note (TNX) has declined nearly 35%, since peaking in October of 2018. The large decline in yields has TNX currently testing the 2017 lows at (2).
What would stock bulls love to see? Most likely a breakout by XLP at (1) and a rally by TNX off support at (2).
What would be of concern to stock bulls? A peak in XLP at (1) and a breakdown of support at (2).
In my humble opinion, the next big move by XLP and TNX will send very important messages to the stock and bond markets!