Gamma Boy Trades
Gamma Boy TradesSep 24
Finance

The Bond Crash is Here: What Happens to SPY & QQQ?

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TL;DR

Bond yields crashed again with ZB down 1.36% and TLT down 1.3%, setting up potential stock weakness unless the Treasury intervenes with stimulus.

Key Insights

1

Bond yields crashed hard today — ZB down 1.36%, TLT down 1.3% — signaling potential peak in rates that could reverse the headwind on equities if the 10-year pulls back toward 4.8%.

2

Momentum held through fake news — A fake Iran-US deal headline hit midday, but SPY held gains and QQQ closed above the reaction high, showing strong underlying momentum despite thin breadth and weak laggard stocks.

3

Trillion in TGA available — If the Treasury sees escalating bond weakness, Yellen will likely deploy a bazooka with the $6 billion test balloon already fired — the real weapon is a trillion in the TGA that can stabilize yields and reignite breadth.

4

Russell stayed resilient — Russell (IWM) stayed resilient despite bond carnage, suggesting rate-sensitive assets aren't panicking yet — but if yields keep rising, that will break first and drag equities down with it.

5

Fade at 97-98 worked — Oil got crushed at the 97-98 level he'd identified as a fade level, and semiconductors closed flat while banks held up on yield curve improvement — classic rotation signals toward rate-sensitive sectors.

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Deep Dive

Bond Collapse and Market Resilience

The bond market got demolished today with ZB cratering 1.36% and TLT down 1.3%, putting Treasury yields under pressure after weeks of climbing. Despite this brutal move, the S&P closed flat and QQQ held above the reaction high from an Iran-US deal fake headline that hit around 12:20 pm. The creator sees this as a three-black-crow pattern in bonds — likely to continue into Friday — but the fact that stocks didn't capitulate on the news shows underlying strength. He argues the bear case is thin: leadership is weak, breadth is weak, but at what yield does the 10-year actually break stocks? We're at 4.5%, possibly hitting 4.8% soon, and the trend on equities remains up across all timeframes. The real test will be whether the market can sustain gains if bond selling accelerates.

Yellen's Bazooka and the Bull Case

The creator lays out his bull thesis: if bonds continue falling, Treasury Secretary Yellen will be forced to act. The $6 billion she's already deployed is a test balloon, not the real move — she has a full trillion in the Treasury General Account ready to deploy. When breadth improves and yields stabilize, the upside on SPY and QQQ becomes significant; he's asking rhetorically where those indexes go if the 10-year pulls back to 4.8%. His position is to follow the trend until proven otherwise: 8 EMA above 12 EMA above 20 50 100 200 on weekly charts, zero bear structure anywhere. He's not heavily long the indexes, but he's also not fighting the trend. The key wildcard is whether Treasury intervention can reverse the bond selloff before it cascades into broader equity weakness.

Sector Signals and Trade Execution

Day trades nailed 736 on QQQ as support and three NQ trades for 594 and 72 points. On the broader tape, semiconductors closed flat despite strength, banks held on yield curve normalization (spreads tightened), and Russell held gains above its intraday dip even as bonds got hammered — interesting for a rate-sensitive index. Oil was the big miss: he called 155 USO as a fade level, got confirmation, and had an order ready when oil futures hit 97-98, but a headline smacked it down before he could enter. XLE gave back gains, and precious metals (gold, silver, palladium) are showing signs of pullback. Bitcoin stayed strong into close at 48k with alts green. The lesson he emphasizes: if you're bearish bonds, short bonds directly — don't short stocks. The market's resilience despite bond chaos suggests that's where the real conviction trade is.

Takeaways

  • ✓If you're bearish on bonds, short bonds directly instead of shorting stocks — that's what's actually worked.
  • ✓Watch for a three black crow pattern on TLT through Friday; a bounce probably doesn't happen until next week.
  • ✓QQQ held above the reaction high despite the fake Iran headline, showing uptrend strength — buy any dip until the 8 EMA breaks.

Key moments

0:16Bond capitulation signal

“ZB getting hammered just absolute crush here down 1.36 TLT down uh 1.3”

1:20Fake Iran headline test

“we got my favorite type of headline right a scam headline and basically that we're you know Iran and US were nearing another deal”

2:51Bull thesis on intervention

“when Bessant fires a bazooka and he will every day we get close to that election and bonds don't turn around he's going to have to fire a bazooka”

10:05Key trading insight

“the mistake here is if you're bearish bonds don't short stocks. Just short bonds. That's what's worked.”

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