Like any other indicator, regardless of its type, it should be approached with caution. Conditions vary across the sample, not every time the USD/JPY or the UST 2y have peaked we were heading into an FOMC easing cycle. Not every time the S&P 500 Index has peaked, it has been on X or Y factors preceding the event
The chart below shows the % of SPX components above the 200DMA (upper panel), the U.S. 2-year yield (middle), and the USD/JPY (bottom). I'm simply noting the times the 2y and the dollar-yen have peaked while stocks record a rally. The amount of SPX components above the 200DMA visual guidance works better than a nominal benchmark chart
USD/JPY and the U.S. two-year Treasury yield cycle tops have not been simultaneous across the sample, however, 2024 is staging one of the rare occurrences which have been seen in 2007 and in 1990. Back in April, 2s failed to break above last year highs, and the dollar-yen peaked above 160.0 in July
In 1990, following both dollar-yen and the 2y peaking, the S&P 500 Index declined almost 18% from July to October. In the 2007 period, the benchmark posted losses surpassing 50% (July 2007-March 2009). As I said, circumstances were different in each period. When thinking of directional strategy, it is more worth holding to the general context than to a set of indicators
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