Rising Yields, Crypto Breakouts, and Where the Next Opportunities May Be
The stock market bounced around this week but managed to recover from Wednesday’s selloff. By Friday’s close, the S&P 500 ($SPX) and Nasdaq Composite ($COMPQ) had fought their way back into positive territory, with most of it coming in the final hour of trading.
But the biggest gains weren’t in stocks. They were in cryptocurrencies. With Bitcoin back above $80,000 and several major cryptocurrencies breaking out, does it mean that “risk-on” is still in vogue?
This week’s update:
- Treasury yields are still rising
- Cryptocurrencies are flashing bullish signals
- How to find stocks with breakout potential
Treasury yields jump
Treasury yields rose on Friday, with the 10-Year Treasury Yield Index ($TNX) closing at 4.998%. The chart below, available to StockCharts members through the Market Summary ChartPack, puts the yield move into perspective. The 30-, 10-, and 2-year Treasury yields are well above the Federal Funds Rate, which was raised to 3.75–4% on Wednesday.
The bottom panel shows the spread between the 10-year and 2-year yields, which is now approaching the zero line.
Crypto’s bullish move
Cryptocurrencies didn’t seem to be bothered by the Clarity Act failing to pass. On Friday, Bitcoin ($BTCUSD) jumped 6.18% and closed above $80,000. Ethereum ($ETHUSD) and Solana ($SOLUSD) posted even larger gains. Several cryptocurrencies are breaking out of continuation patterns, giving the asset group a much more bullish technical look. Take a look at the chart of Solana below.
When you see such breakouts, you might wonder if similar setups are developing elsewhere. Well, there are stocks that are breaking out of continuation patterns, and you’ll find some of them in this week’s article lineup below.
You can also search for these breakouts with the StockCharts scanning tools by creating a scan or browsing the Sample Scan Library, particularly the Technicals and Chart Patterns sections.
There’s another way to sharpen your process for finding stocks with breakout potential, sometimes before they gain the financial media’s attention.
Learn how to find winning stocks
Finding promising stocks is one part of becoming a successful trader or investor. Building a repeatable process for finding them and knowing when a setup is no longer working is just as important.
StockCharts is now offering a course from Mary Ellen McGonagle, which you can find in the StockCharts Marketplace. In the course, you’ll learn to:
- Build a repeatable process for finding stocks with potential. Learn to recognize price patterns that can signal a stock that’s preparing to break out.
- Read the broader market. Know when institutional investors may be moving away from high-flying stocks.
- Protect your capital. Understand when the bullish case is no longer valid and when it might be time to move on.
Successful investing isn’t just about finding great stocks or ETFs. It’s also recognizing when to fold your positions.
Have a great weekend!
