This Chart Carries Weight
Nicholas Santiago | Jul 17, 2013 01:15PM ET
One of the most important charts that any trader can follow is the iShares Barclays 7-10 Year Treasury (IEF ).
Generally when this chart declines, so too do stock-market indexes. You see, when the IEF chart starts to dip, it means that the yield on the 10-year U.S. Treasury is moving higher. Remember, higher bond yields are problematic for mortgage REITs, utility and home-builder stocks. If market-moving institutions perceive that the current quantitative easing program is going to end, it could send the IEF sharply lower. Currently, the IEF is trading below the important daily chart 50- and 200-day moving averages, which keeps the ETF in a weak technical chart position.
Other ETFs To Watch
Traders should note that the Utilities Select Sector SPDR (XLU) seems to be trading inverse to the IEF. Other ETF's that could be adversely affected be a weak IEF include the iShares Dow Jones US Home Construction (ITB) and the iShares Mortgage Real Estate Capped (REM).
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