Stocks Rebound as Yields Ease, but Bond Market Still Holds the Key

Stocks are pushing higher this morning as Treasury yields and U.S. oil ease, giving the broader market another chance to regain momentum after this week’s volatility. The bigger issue is still the same: equities can continue higher if yields and oil stay under control, but either one moving sharply higher again could quickly put pressure back on risk assets.

In One Minute

The market is trying to stabilize, with the SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust (QQQ) both pushing higher as the United States 10 Year Treasury Yield (US10Y) and oil cool. The immediate opportunity is a renewed breakout in stocks and semiconductors, but the biggest macro risk remains the bond market, especially with the United States 2 Year Treasury Yield (US02Y) rising faster than the 10 Year Treasury Yield. Watch $768.54 on SPY, $748.65 on QQQ, $607.58 on the VanEck Semiconductor ETF (SMH), and the relationship between the 2 Year yield at 4.89% and the 10 Year yield at 5.177%.

The Setup

The United States 10 Year Treasury Yield remains the main force controlling this market.

The 10 Year recently broke above 5.021%, a resistance level going back to 2023, and is moving into territory associated with levels last seen around 2007. On the larger chart, the next major resistance sits at 6.249%, a level seen around 2000.

The structure has been developing in steps: consolidation, followed by another push higher. That matters because rising long-term yields create pressure across equities, housing, financial conditions, and other rate-sensitive parts of the market.

The relationship between the 2 Year and 10 Year yields is becoming just as important. The 2 Year is at 4.89%, while the 10 Year is at 5.177%. Since August 25, the 10 Year has increased 13%, while the 2 Year has increased 18.2%.

If the 2 Year eventually moves above the 10-year, that creates an inverted yield curve. Within this setup, that inversion has preceded recession about 85% of the time, generally six to 24 months in advance. It does not mean recession begins immediately, but it becomes an important warning signal.

What Changed

The SPDR S&P 500 ETF Trust (SPY) is attempting another breakout after Monday’s move failed to produce follow-through and price slipped back below the declining trend line. Premarket action is now pushing back above that area.

The level I want to see hold is $768.54. A daily close above it would improve the bullish structure, particularly if Treasury yields and oil remain contained.

The Invesco QQQ Trust (QQQ), which tracks the Nasdaq 100 Index (NDX), is also pushing higher. The broader Nasdaq Composite Index (IXIC) has already reached all-time highs, while QQQ is approaching resistance at $748.65. A daily close above $748.65 would strengthen the near-term outlook for technology.

The VanEck Semiconductor ETF (SMH) remains one of the better measures of risk appetite. It recently broke above the declining trend line from its all-time highs and also broke out of the longer-term declining parallel channel that had contained price since the April 2025 lows.

SMH is now running into the 61.8% Fibonacci retracement at $607.58. A daily close above $607.58 increases the probability of a move toward $635.84.

Gold Spot U.S. Dollar (XAUUSD) is trying to recover the bottom of the parallel channel that has defined its structure since the April 2025 lows. Gold recently broke that channel below, and the immediate resistance level is $4,347.

Silver Spot U.S. Dollar (XAGUSD) is up 1.28% and testing the inclining trend line connected to a failed head and shoulders pattern. The level is $64.62. A close above $64.62 would improve the near-term setup.

West Texas Intermediate Crude Oil Futures (CL) have pulled back as the market reacts to the possibility of a phased reopening of the Strait of Hormuz. Oil had been climbing inside an inclining parallel channel and recently approached resistance near the 50% area of that channel before selling off.

The larger oil structure remains an inverse head and shoulders pattern. The declining trend line forms the neckline, and the measured move points above $116. If the Strait reopening process breaks down, oil could begin pushing higher again.

Natural Gas Futures (NG) have broken out strongly, although the move is becoming stretched. The Relative Strength Index recently reached 70, so a short-term pullback would make sense. The important point is that natural gas is still holding its breakout.

The next destination is the bottom of the larger parallel channel at $3.56. On the weekly chart, natural gas has spent significant time in bearish consolidation below that channel. As long as the breakout holds, pullbacks remain constructive within this setup.

Zscaler Inc. (ZS) has pulled back slightly after a strong move higher and a surprise change involving its CRO. The broader technical structure remains focused on a retest of the inclining trend line that broke back in January.

Resistance sits at $226.79. That area also lines up with the 50% Fibonacci retracement, creating a stronger resistance zone where profit-taking could appear.

Fastly Inc. (FSLY) is approaching a major potential breakout. The chart shows a large inverse head and shoulders pattern with a neckline at $29.83. A daily close above $29.83 would confirm the breakout structure, with a measured target of $46.33.

The cleaner setup would be a breakout, followed by a retracement and successful hold rather than chasing the initial move.

Tesla Inc. (TSLA) continues drifting higher, but momentum is losing some strength. Price is approaching resistance around $400, where the broken trend line from the April 2025 lows comes back into play. That area may require consolidation before Tesla can establish a stronger breakout.

Meta Platforms Inc. (META) has also had a strong run, helped by enthusiasm around artificial intelligence and its newest virtual reality products. Meta’s new virtual reality glasses weigh roughly 100 grams, while its Muse artificial intelligence agents are helping users with tasks ranging from recipes to vacation planning.

Technically, Meta is becoming stretched. The stock is approaching a triple top around $795, while the 50% area of its parallel channel sits near $798. That puts the larger resistance zone around $800.

The Relative Strength Index is 80.51, well above the 70 level considered overbought in this framework. I would rather see a pullback or consolidation that allows the RSI to cool before looking for another move higher.

MGM Resorts International (MGM) recently broke below an important inclining trend line from the April 2025 lows following a sharp decline tied to changes in an acquisition situation.

The transaction dynamics have since shifted, and MGM is pushing slightly higher. Once that situation settles, the key recovery level is $35.55, which lines up with previous low pivots and the broken declining trend line.

Digital Assets and Crypto

Bitcoin (BTC) is relatively quiet right now, but the technical setup is clear.

The key level this week is $88,948, which represents the neckline from the previous head and shoulders pattern. Bitcoin needs to reclaim that level to materially improve the chart.

A move back above $88,948 would likely bring more technical buyers into the market and open the door toward the next major resistance area near $104,000, which lines up with the 50% area of the parallel channel.

For now, $88,948 is the dividing line. Below it, Bitcoin remains in a more neutral technical position. Above it, the setup becomes much stronger, with $104,000 becoming the next major target.

Why It Matters

The important relationship across all of these markets is the interaction between yields, oil, and risk appetite.

If yields cool and oil remains contained, stocks have room to confirm their breakouts. That supports SPY, QQQ, semiconductors, and other growth stocks.

If the 10 Year yield begins another sharp move higher, or the 2 Year continues catching up rapidly, the pressure on equities becomes harder to ignore.

Oil adds another layer. The current pullback helps the broader market, but its inverse head-and-shoulders structure still points to significant upside potential if geopolitical conditions deteriorate.

Gold and silver are both trying to reclaim important technical levels, while natural gas is already holding a breakout.

Bitcoin is dealing with its own confirmation level at $88,948, but the broader message is similar: price still needs to prove the breakout before conviction increases.

Key Levels

The most important levels for the broader market are still 5.177% on the 10 Year yield, $768.54 on SPY, $748.65 on QQQ, and $607.58 on SMH. For Bitcoin, $88,948 is the level that determines whether the next move toward $104,000 becomes more realistic.

Bull Case

The bullish case starts with yields and oil remaining under control.

SPY needs to hold above $768.54, QQQ needs a daily close above $748.65, and SMH needs to clear $607.58. If SMH confirms that breakout, $635.84 becomes the next major resistance.

Gold improves above $4,347, while silver strengthens with a close above $64.62.

Natural gas remains constructive as long as its breakout holds, with $3.56 as the next destination.

Fastly confirms its inverse head and shoulders above $29.83, opening the measured move toward $46.33. Zscaler can continue toward $226.79, while Tesla and Meta need consolidation before attempting stronger breakouts.

Bitcoin becomes more constructive above $88,948, with $104,000 as the next major resistance.

Bear Case

The biggest risk is another acceleration in Treasury yields.

The 10 Year has already broken 5.021%, and 6.249% remains a larger resistance level above. If the 2 Year continues rising faster and eventually moves above the 10-year, the yield curve would invert and strengthen the recession warning within this setup.

A renewed rise in oil would also pressure the broader market, particularly if the Strait of Hormuz reopening process falls apart. Oil’s larger inverse head and shoulders pattern still carries a measured move above $116.

Meta is already stretched with an RSI of 80.51, and Tesla is approaching resistance around $400. Both could require consolidation before making additional progress.

Gold still needs to recover its channel, silver still needs to close above $64.62, and Bitcoin still needs to reclaim $88,948. Until those confirmations occur, the breakouts are not complete.

What to Watch Next

Watch the United States 10 Year Treasury Yield first. The bond market has driven much of this week’s volatility, and the relationship between the 2 Year at 4.89% and the 10 Year at 5.177% remains critical.

Then watch oil and the Strait of Hormuz situation. Continued easing in oil supports equities, while renewed geopolitical pressure could quickly reverse that benefit.

For stocks, the confirmations are straightforward: SPY above $768.54, QQQ above $748.65, and SMH above $607.58.

For individual names, watch Fastly at $29.83, Zscaler at $226.79, Tesla near $400, Meta between $795 and $800, and MGM at $35.55.

For crypto, Bitcoin at $88,948 remains the key technical test.

Bottom Line

The market is trying to move higher, but yields still control the larger setup. If the 10 Year settles down, oil remains contained, and SPY, QQQ, and SMH confirm their breakouts, risk appetite can continue improving across stocks, commodities, and Bitcoin.

The levels are clearly defined, so there is no reason to chase. Let price confirm the breakout, respect resistance, and stay patient while the bond market decides whether this move has room to continue.