Morning Notes — Nearing Technical Support

Presently trading at ~1.53%, ten-year Treasury yields are testing the highs from last Thursday.  Another breakout in bond yields would likely accelerate the recent rerating in high multiple stocks.  If there’s any good news for shareholders, it’s that many of these names are now in short-term oversold territory and the S&P 500 is approaching technical support in the 3700-3750 range.  The bad news is positioning in high-multiple stocks remains crowded and stocks can trade meaningfully lower while in oversold territory.  The NASDAQ 100 (NDX) has taken the brunt of the punishment as large-cap Tech is being sold to fund the reopening/reflation trade.  The NDX is also nearing primary technical support at 12,200-12,400.  Expect that level to hold, but sharply higher bond yields with crowded positioning and concentration risk could turn this ‘pullback’ into a textbook correction.  We’ll use successful reversals from support levels as an opportunity to add cyclical/value exposure only.