Hello and welcome back to CantosCharts. My name is Eoghan Leahy and I'm a Technical Analyst and Trader with Fat Prophets here in the UK.

So we've discussed, two days ago we had a look at the market, the bull case, the bear case and tried to see which direction it might take when volume comes back in after this Labour Day week. We had a look at copper and how that's potentially a lead indicator for the market and how we're going to have a look at the 10-year treasury.

In general, there's a relationship between bonds and equities where they'll have an inverse relationship which has been broken down somewhat by some of the stimulus measures taken in the US. But at this stage in the equities rally, well it would be quite bullish if we could see perhaps money moving out of bonds and back into risk assets such as equities.

So having a look here at the US 10-year treasury note we can see we're currently testing the uptrend and 50 day moving average which suggests a break of these support levels we might see a move back to this 122 level which would coincide probably with an increase in risk appetite which will be bullish for equities, commodities etc.

We can see there has been an RSI divergence here and we've also seen some large volume on the selling which also suggests we might see a sustained move to the downside.

Having a look here now we can see this is the S&P futures versus the 10-year note and we can see the 10-year note is kind of leading the way here. It's broken its uptrend whereas the S&P futures are pinned right up against this resistance level. So the key issue is, are bonds going to continue lower? Will we see that breakout that we've been looking for in equities?

Moving on here, back to the cloud charts, we can see bonds are still in a clear uptrend on the daily level so we wouldn't recommend shorting. The real key we're looking at here is, are we starting to see an increase in risk appetite and asset allocation shift back towards equities.

So again, back to our MACD and our parabolic stop and return indicators and we can see here although we're still in an uptrend on the daily, we're getting a negative MACD crossover and we also have a negative reading on the parabolic stop and return. We'd really want to see a cross through the cloud before we would even consider shorting bonds. But this could be a bullish indicator potentially for equities at present.

Having a look now, this is the yield of the 10-year and we're actually at quite an interesting support level.

So again, yield obviously moves inverse to prices, so if we can see some support here in a rising yield off this 260, 270 level, it could coincide with a further move to the downside on bonds which, as we said, could be bullish in equities.

Similarly, though, should we see this level drop, we could see a rapid move lower in bond yields, higher in bond prices which would again suggest a risk off trade which would be bearish for equities.

So thank you very much. My name has been Eoghan Leahy from Fat Prophets. This has been CantosCharts and keep an eye on copper, keep an eye on the 10-year and have a look at that volume in the next week or two and see which direction it leads the market. It could define a direction for the coming weeks and months. Thank you very much.