VRA Letter: Significant Outside Reversal Days in 2/10Year Bonds & HYG. Rich Ross, Buy Semis/tech, Bonds, Bitcoin & Tesla.
 
October 24, 2023

Good Tuesday morning. Last Thursday/Friday we focused on the “outside day” that took place in 2 year bonds, as an intraday spike higher in yields was followed by a sharp reversal lower, taking out both the highs and lows of the previous days trading, creating a technical buy signal in the 2 year. Outside days commonly mark significant reversal signals, especially when they take place in highly correlated asset classes.

Below, in 10 year yields, we see what may be an even more important outside day that took place yesterday as the 10 year yield surged past 5% at the open of trading and then reversed sharply lower to 4.84% this AM. The 10 year is a widely followed global benchmark for interest rates and this rather massive outside day from yesterday may be another important tell that the Fed has reached the end of their 19 mont...