One of the most important charts that any trader can follow is the chart of the iShares Barclays 7-10 Year Treasury (NYSEARCA:IEF). Basically, when this chart declines so will the stock market indexes. You see, when the IEF chart starts to dip it means that bond yields on the 10-year U.S. Treasury Note is moving higher. Higher bond yields are problematic for the mortgage REITs, utility stocks, and the home-builder stocks. Should the stock market moving institutions perceive that the current quantitative easing program is going to end it could sent 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. Should the IEF decline today, short term day traders should watch for intra-day support around the $102.20 level.
Traders should note that the Utilities Select Sector SPDR (NYSEARCA: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 (NYSEARCA:ITB), and the iShares Mortgage Real Estate Capped (NYSEARCA:REM).