EB Daily Market Report - Brief Update - Wednesday, May 21, 2025

This will be very brief, because it's my birthday and I don't want to work any more today. :-)

Well, are the short-term red flags finally resulting in the start of a pullback? That certainly appears to be the case, with just 20 minutes left before today's close. The 10-year treasury yield ($TNX) has spiked to a key level of short-term resistance near 4.60% and that may be adding to the recent list of red flags that I've discussed. A move above 4.65% could signal that 4.80% is back in play. Here's the TNX:

There was a treasury bond auction today at 1pm ET and the TNX jumped 6 basis points after that auction. If you look at the S&P 500, selling in U.S. stocks began at the same time:

I doubt this is a coincidence, so I'm remaining on the sidelines for now to let this play out.

Remember, the equity only put call ratio ($CPCE) has its 5-day SMA at 0.48, the lowest level (and most complacent/bullish) over the past 52 weeks. We always need to be careful when the options world gives us this message.

The Volatility Index ($VIX) has been down a lot, but it's not dead. It never closed below 16, which provides hope for the bears to turn the action lower again. So far, they're taking advantage of that. The VIX has spiked 12.4% to 20.34, but off of its earlier high at 21.05.

Today's close and tomorrow's open could be quite interesting.

Happy trading!

Tom