Even the strongest rallies don’t go up in a straight line.
On Monday, I said right here on this newsletter that we could see a pullback this week.
It looks like that’s exactly what’s happening.
The likely catalyst?
Something that just happened in the bond market.
Chart of the Day
Yesterday, the US Treasury department held an auction for $16 billion of 20-year government bonds.
This chunk of government debt sold at a yield of above 5%...
An indication that investors are worried about the government’s fiscal burden – and are demanding higher yields as a result.
Couple that with the Moody’s downgrade earlier this week…
And it’s no surprise that such worries spread into the equity market.
As you can see from the chart above, the majority of the selloff happened right after the auction.
Yields on 10-year and 30-year US Treasuries have also spiked, with the 30-year yield now just shy of 5.1% – a near two-decade high.
But as I show below…
There’s still plenty of risk appetite left in the market.
Insight of the Day
Bitcoin’s breakout to new all-time highs proves there’s plenty of risk appetite in the market.
The more risk appetite in the market, the more action.
And the more action, the more opportunity there is for traders.
As for proof as to why there’s still a lot of risk appetite left in the markets, look no further than the price of Bitcoin – which just hit a new all-time high yesterday.
Despite what some people will tell you, almost no one uses BTC as a portfolio hedge like gold.
It’s a pure risk-on asset.
And it’s breakout to new all-time highs yesterday – especially amid the broader market pullback – tells me we’re still in a heavy risk-on environment.
So let’s use this pullback as what it really is – an opportunity.
You can use it to buy the dip in the highest-potential AI stocks that still have room left to rocket.
And as part of our Memorial Day special…
But this deal will be gone soon, so act fast.
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Ross Givens
Editor, Stock Surge Daily
