Bond yields have been breaking out higher but the stock market's been holding firm. Investors still cringe about February's market meltdown due in part to spiking yields. Concern is of course warranted but "market action" may be more important. Holding firm this time around would be bullish.

Bullish Action, New Highs Ahead?

The concern about rising rates is clear. Everybody would expect that this recent rise in rates should hit the stock market once again.But if it doesn't, what does that mean?

We always watch "action" which is the trading tool to compare what should happen to what does happen.

What should happen? The market should start to crash again.

What's actually happening? The market's holding firm.

Despite the negative catalyst the market's not responding negatively yet this time which tells you there are other stronger positive forces on the market. 

It's a bullish sign that despite rising rates, the market has the ability to move higher.

Let's Go To The Video Tape

(Click on image to enlarge)

Source

On the left you see that late January, early February's yield spike helped markets into a mini-crash.

Scan to the right and you see yields spiking all over again real-time but you also notice the S&P 500 ETF SPY isn't budging this time.

That's a case of "bad news" "good action" and it's a bullish trading signal.

But Why Are Rates Jumping This Time? Price Or Demand. That May Be The Answer

GDP is forecast to accelerate in Q2.

Our contacts in tech have been saying that demand is broadening out to not only cloud/hyperscalers spending, but the rest of enterprise, traditional companies, the rest of the economy.

That's bullish and tech usually leads.

So maybe just maybe rates are moving up this time not because of inflation fears but because demand is just better.

CPI came in with a very low last reading.

Low inflation and high growth is of the Goldilocks variety, something we haven't really seen since the 90s. Oh boy that would be nice, right?

Rising rates, but not because of inflation, may be the reason that the market's not dropping off this time. Inflation is a market thorn. No thorn, no pain.

Conclusion

We're all bulled up.Tech fundamentals are strong led by a broadening out of tech spend. Relatively low rates and inflation and "bad news" "good action" can get this market back to new highs soon once again.