Massive spike in 10-year treasury rates spooked small cap stocks, triggering huge gap-down open in Nasday NQ. It continued to sold-off until the Fed were above to pushed the treasury yield down.
The decline in the 10-year yield looks choppy, and could set up another surge in yield. Breaking above 1.50% could crash the stock market particularly stocks in Russell 2000 and Nasdaq indexes.
NQ sold off hard in the morning on Wednesday, then rally when treasury yield started to decline. The inverse correlation between yield and stocks should continue. Rising yield is bearish and falling yield is bullish.
Key level for NQ on Thursday will be at 13,750, now resistance, and wil turn into support on a clear and sustained break above it.
