The Closing Print live trading and financial blog during market hours.

Until we see the markets pick a direction, we have no edge.

When applied to the S&P 500 we are contained in yet another sideways range. With the exception of the drop on September 9, we’ve been unable to capitalize without a decisive direction.

That said, price has maintained a bullish bias, steadfast in its effort to remain above the 20ma. The 10 year yield is in the lower window. If the latter turns in the short term we could receive much needed direction shortly thereafter.

spx-tnx

Seasonally speaking October and November are fairly bullish months. Odds favor the bulls, even if this is an election year.

oct-seasonality

Talk of yields the dollar and gold only confuses the issue. Some writers point to the strength in the US dollar as a reason for golds Tuesday demise. Yet king dollar is still inside of this major triangle pattern.

usd

Tuesday’s move doesn’t correlate to the dramatic 43 point drop. Gold is viewed as the Safehaven asset. If gold has been rising for the past nine months what was the catalyst?

My view is, the dollar is relatively tame and presently in capable of inflicting the kind damage we saw in gold yesterday.

gold

More than likely golds drop had to do with a fund or central bank liquidating assets.

If the 10 year yield breaks out in the short term, that will likely affect US equities in a negative fashion. That could happen between now and the elections, with many expecting a hike in December.

tnx-10

I’ll leave you with a chart of SPX for the past two years. Focus on October and November. While we do have years like 2012, that failed to produce a rally during October, I don’t see a lot of catalysts for us to repeat a losing performance this year.

oct-2014-2015

Treasury yields are the caveat. Keep an eye on these criminals, as bond traders usually forecast correctly. After all, the bond market is two and a half times the size of the equity market.

Happy Trading – Vinny