PULLBACK IN BOND YIELDS MAY BE BOOSTING TECH STOCKS AND NASDAQ -- YIELD PULLBACK, HOWEVER, MAY BE TEMPORARY

10-YEAR YIELD PULLS BACK... Despite all the talk about accelerating inflation, bond yields have been pulling back of late.   The daily bars in Chart 1 show the 10-Year Treasury yield falling to the lowest level in three weeks and trading below its 50-day moving average.   The TNX set a 52-week high during March which was starting to have a negative impact on stock prices.   Which is why the current pullback in yields may be providing at least short-term support to stocks, and especially to technology stocks and the Nasdaq market.

NASDAQ 100 REGAINS 50-DAY AVERAGE... Chart 2 shows the Invesco QQQ Trust trading back above its 50-day moving average, and nearing a test of overhead resistance formed three weeks ago (flat line).   The Nasdaq has risen faster than the Dow and S&P 500 over the last couple of weeks while bond yields have declined.  There may be some linkage between the two. Technology stocks have also regained their 50-day line.

XLK AND SMH REGAIN 50-DAY LINES... Chart 3 shows the Technology Sector SPDR (XLK) trading back above its 50-day line as well.   To extend those gains, the XLK needs to clear the small shelf of resistance formed three weeks ago marked by the flat trendline.   Chart 4 shows the Van Eck Vectors Semiconductor ETF (SMH) struggling with the same resistance level.   The rebound in technology shares has helped support the current rebound in stocks in general.   It should be noted, however, that the current pullback in bond yields may be a temporary in nature.   It remains to be seen how technology stocks and the rest of the market will react to another upturn in bond yields which seems likely.