Weekly Technicals Essentials

Sentiment tensions ease; but S&P 500 still stretched.

A number of the over-stretched sentiment angles we have highlighted in recent weeks have modestly unwound, with bonds, the US dollar and Copper backing off from SBI extremes. But S&P 500 pessimism remains stubbornly stretched. 

US corporate bonds are worth watching.

US corporate bonds have a notable relationship with VIX. While the US corporate bond OAS chart is constructive, its SBI is nearing levels that have seen resistance in recent years. US high yield trend bias versus investment grade remains bullish. 

Key levels for US 10Y yield and EM bonds. 

US 10Y yield has run into a sentiment headwind as it neared 2018 highs. First line of potential technical support for yield is around 2.59%. Oversold EM local currency bonds have reached an important potential support area.