Rising Treasury Yields Put the S&P 500’s Bullish Trend Under Pressure

Stocks are pulling back after an overnight rally as the U.S. 10 Year Treasury Yield moves higher following the Bank of Japan's decision. The bigger fight remains the same: equities can hold up while yields stay contained, but rising rates, expensive energy, and heavy debt are putting increasing pressure on that balance.

In One Minute

The S&P 500 Index (SPX) is still holding above its bullish trend line, so my near term bias remains constructive, but the U.S. 10 Year Treasury Yield is back at 4.984% and 5.02% is the level I am watching closely. The Bank of Japan raised rates by 25 basis points but did not signal aggressive additional tightening, which weakened the yen and helped push U.S. yields higher. Oil is back above $102, diesel is at a new all-time high of $6.45, and triple witching brings $7.7 trillion or more in options expiration into the session. If the 10 Year breaks 5.02%, the next major area is 5.3% to 5.5%, and that could change the tone quickly.

The Setup

The market is trading around one central relationship right now: yields up, stocks down.

The Bank of Japan raised rates by 25 basis points, but the Japanese yen still weakened significantly against the U.S. dollar because the bank did not guide toward another meaningful round of tightening. Markets had expected a more hawkish stance.

That matters because Japan is carrying debt equal to roughly 230% of GDP. Higher rates increase the cost of servicing that debt, and the same broader issue exists in the United States. Governments want to keep long-term borrowing costs under control, but markets can push those rates higher when confidence in fiscal discipline weakens.

The S&P 500 is still above its bullish trend line. We already saw panic selling around the Federal Reserve, followed by a rebound as Treasury yields pulled back. The Bank of Japan decision has now brought the yield question right back into focus.

What Changed

The U.S. 10 Year Treasury Yield moved back to 4.984%, nearly reversing the previous pullback after the Federal Reserve. The critical technical level is 5.02%. If yields break above 5.02%, there is no major immediate resistance until the weekly chart brings 5.3% to 5.5% into view.

The U.S. Dollar Index (DXY) has also moved into resistance. Price is meeting an ascending trend line that connects the major lows along with a horizontal pivot area. I still expect that area to create resistance.

The U.S. Dollar to Japanese Yen currency pair (USDJPY) has moved sharply higher as the yen weakens. USDJPY had experienced a large correction as the yen strengthened, but that move has been reversing over the last several days. If USDJPY continues higher, significant resistance remains overhead, although no exact level was provided.

Energy is adding another layer of pressure. West Texas Intermediate Crude Oil (WTI) was down early but reversed higher and is trading above $102 per barrel. There is still meaningful resistance overhead, but even a move back toward $106 could create additional pressure for equities and Treasury yields.

Diesel has reached a new all-time high of $6.45. That matters because transportation costs eventually work through trucks, airlines, food distribution, and consumer prices. Higher jet fuel also raises the risk of more expensive air travel into the Christmas period.

Gold Spot (XAUUSD) is showing relative strength even with both yields and the dollar higher. That is worth watching because those two forces normally create pressure on gold.

Silver Spot (XAGUSD) is also strengthening. The important technical structure is a descending trend line running from the all-time high through two major pivots. A clean break through that trend line could open the door to another leg higher.

Copper Futures (HG) have retraced toward the area where a wedge previously broke down. That puts copper back near a potential short setup. The United States Copper Index Fund (CPER) is the vehicle I would use if price inches slightly higher into that trend line. The earlier copper short was already closed for profit.

Natural Gas Futures (NG) continue to do very little. Price has been mostly stagnant since early July, even while crude oil has made a major move. The dynamics are different from oil, but seasonality is approaching, and Europe is dealing with a major shortage, so I am watching to see whether natural gas finally starts participating.

Refiners remain another important energy story. Valero Energy Corporation (VLO), Marathon Petroleum Corporation (MPC), and Phillips 66 (PSX) have benefited from strong crack spreads. Even when oil pulled back, refining margins improved.

The new risk is the discussion of a possible European windfall tax on refiners. If such a tax were announced and passed, these stocks could fall roughly 15% to 20% because it would cut into current profits.

Valero is especially stretched after rising roughly 77% since June. Refining margins are cyclical, and crack spreads historically widen and then contract. I remain bearish on Valero over the coming weeks and months and already have a short position.

Apple Inc. (AAPL) has now filled an important gap following its earlier decline. That gap fill has moved Apple into an area where I am interested in a swing short. I have not entered yet. New iPhone demand appears slightly better than last year based on order delays, but it is not overwhelming, and higher gasoline and diesel costs may be stretching consumers. Technically, the larger point is that Apple's rebound may now be extended.

CrowdStrike Holdings, Inc. (CRWD) is also getting stretched within the cybersecurity side of the artificial intelligence trade. The price is approaching an important trend line while the stock moves into an overbought area. My eventual downside target is the $192 to $188 zone, where a gap fill and ascending trend line come together.

Netflix, Inc. (NFLX) is falling after a downgrade. The first support area is around $71.50, while the new price target is approximately $52. The concerns include weaker content quality during the second half of the year, along with other factors. I do not like Netflix as a swing trade here, but it is interesting as a day trade as price approaches that $71.50 support area.

Triple witching also matters today. More than $7.7 trillion in options are expiring, with the potential for especially sharp swings between roughly 1:30 and 3:30. Technical levels can become less dependable during that period because institutional options positioning can move stocks rapidly. Institutions account for 99% of options sold to retail, so expiration dynamics can become a major short-term force.

Digital Assets and Crypto

Bitcoin (BTC) remains technically constructive after holding major support even with the Clarity Act effectively done for the year.

That support hold is important because the structure still looks like a bull flag. Bitcoin has started pushing higher again, and I remain bullish while that major support continues to hold.

The long entry came just above $76,000. The trade was taken close to support so the risk could remain small. If Bitcoin breaks that support below, the position can be stopped with only a couple hundred dollars of loss. So far, that setup is working, and Bitcoin is moving higher.

Strength is also spreading into Zcash (ZEC) and Hyperliquid (HYPE), with both moving sharply higher.

Hyperliquid is different tactically because it has reached the upper end of a parallel structure. I have taken a small short position there. That does not change the broader crypto strength, but it does mean Hyperliquid is reaching an area where chasing the move higher becomes less attractive.

Why It Matters

The market is dealing with several pressures at the same time.

Higher Treasury yields make equities harder to support. Higher crude oil and diesel prices increase transportation and consumer costs. A stronger dollar can pressure other assets, while the weakening yen shows how quickly currency markets can respond when central bank expectations change.

At the same time, gold and silver are holding up despite higher yields and a stronger dollar, Bitcoin is defending major support, and the S&P 500 is still above its bullish trend line.

That is why I do not want to treat the market as broadly bearish yet. The warning signs are growing, but the technical breakdowns that would confirm a larger change have not happened.

Key Levels

The two levels controlling the broader market are 5.02% on the U.S. 10 Year Treasury Yield and the bullish trend line on the S&P 500. If yields break higher while the S&P loses that trend line, the market structure becomes much more vulnerable.

Bull Case

The bullish case starts with the S&P 500 continuing to hold its trend line while Treasury yields stay below 5.02%.

If the U.S. Dollar Index rejects from resistance, that would also reduce one source of pressure across markets.

Gold remains interesting if it can stay strong while yields and the dollar remain elevated. Silver becomes more constructive if it breaks the descending trend line from the all time high.

Bitcoin remains bullish while major support holds and the bull flag stays intact. Zcash and other crypto assets are already showing strong upside participation.

Natural gas could also begin participating if seasonality and the European shortage finally pull it out of the sideways structure that has existed since early July.

Bear Case

The biggest warning would be the U.S. 10 Year Treasury Yield breaking 5.02%. That would open the door toward 5.3% to 5.5% and increase pressure on equities.

If the S&P 500 loses its bullish trend line, my view moves from bullish toward neutral. A clean break below that structure becomes the larger risk signal.

Oil moving back toward $106 would add more pressure through inflation, transportation costs, and Treasury yields.

Apple is approaching an area where the filled gap creates a swing short opportunity. CrowdStrike remains vulnerable to an eventual move toward $192 to $188. Valero remains exposed after its 77% rally and could face additional pressure if crack spreads normalize or windfall tax discussions advance.

Copper remains a short setup if it reaches the broken wedge trend line again.

For Bitcoin, losing the major support that produced the entry just above $76,000 would invalidate the current long setup. Hyperliquid is already at the upper end of its parallel structure, which is why I am treating that area as a tactical short rather than chasing the rally.

What to Watch Next

The first thing I am watching is the U.S. 10 Year Treasury Yield at 5.02%.

Next comes the S&P 500 bullish trend line. As long as that structure holds, the market still has room to remain constructive.

I am also watching WTI above $102 and whether it begins moving back toward $106, along with diesel at $6.45.

For metals, I want to see whether gold can continue showing strength against higher yields and a stronger dollar, and whether silver can finally break its descending trend line.

For individual stocks, Apple is approaching a potential swing short area, Netflix is moving toward $71.50 support, CrowdStrike has $192 to $188 as the eventual downside target, and Valero remains vulnerable after its 77% rise.

In crypto, Bitcoin needs to continue defending major support, while Hyperliquid is testing the upper end of its parallel structure.

Finally, triple witching means I am giving unusual intraday moves extra room. With more than $7.7 trillion in options expiring, price can move aggressively between roughly 1:30 and 3:30 without giving us the kind of clean technical behavior we normally want.

Bottom Line

The market is still holding together, but Treasury yields are getting dangerously close to becoming the deciding factor. If the 10 Year stays below 5.02% and the S&P 500 holds its bullish trend line, the near-term setup remains constructive; if yields break higher while equities lose support, the risk changes quickly.

Oil above $102, diesel at $6.45, resilient precious metals, and Bitcoin holding major support all reinforce the same message: this is not a market to chase. Let price reach the level, wait for confirmation, and keep the risk defined.