The Foundation Is Cracking: What Bond Volatility Tells Us About Stocks

by | May 26, 2026

🚨 Where the Real Gem Stocks Are Hiding🚨
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Before we dive in, let me say this plainly: It’s fascinating watching the bond market recently. You don’t usually see this kind of volatility.

This isn’t normal. It demands attention.

I came up in this business on the fixed income side. I was part of Bateman, Eichler, Hill Richards out of Los Angeles, where I learned the bond market from the ground up.

Even though I trade equities today, I’m still very much a bond guy at heart. That background is why these swings stand out to me more than they might for equity-focused traders.

And I’m not the only one seeing it. As my colleague Tom Busby put it recently, you need a full understanding of multiple markets. He’s always looked at 30-year bond index options for insight.

The Bond Volatility Nobody’s Talking About

The bond market is showing a level of instability we usually only see during major macro shocks.

Even on quiet equity days, the underlying regime has changed.

When yields move like they have over the last few months, equity markets stop behaving cleanly.

Stocks need rate stability to build momentum. We’re nowhere near that right now.

This is where our system becomes essential.

Every morning I publish a Market Scorecard in my Telegram channel that tracks conditions in real time.

That scorecard has real value because it detects shifts in the bond regime before they spill into equities.

With yields whipping around this spring, the scorecard has consistently flagged elevated structural risk.

That shapes how we approach defined-risk trades and 0DTE setups.

Tom and I were also talking about positioning in this environment.

He mentioned buying zero coupon municipal bonds.

If rates drop in the next year or two, those could move from the mid-20s to around 40 quickly.

Worst case, you still collect tax-free interest at maturity.

It’s a clean example of turning volatility into opportunity without taking reckless risk.

What This Means for Your Trading

Most traders ignore the bond market.

But it’s the key to understanding why so many equity setups look good on paper and then fail in execution.

If you’re ignoring bond volatility, you’re trading with one eye closed.

This isn’t a time to be fearful. It’s a time to be precise.

In environments like this, defined-risk strategies matter more than ever.

You want trades with clear parameters and structured outcomes.

You also want a clear understanding of what conditions must shift for the trade to work.

The foundation of the market is moving.

Staying blind to that movement is costly.

Keep the bond market in your field of view, because right now it’s one of the main forces shaping everything else.

👉 Click here to join Alex and Geof for Profit Panel at 2:30 p.m. ET on weekdays!

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Talk soon,

JD
The Rational Trader

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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk. 

P.S. I’m Going Live at 3 PM ET Today — Tune in Now 

I’ll break down a few stocks that I believe are flying completely under the radar right now.

While most traders stay glued to the big AI and chip names…

I’ve been digging into a different group of stocks quietly showing signs of momentum beneath the surface.

That’s usually where things get interesting.

Because by the time the crowd notices these names, the bigger move is often already underway.

In today’s session, I’ll show you:

→ The off-the-radar stocks currently on my watchlist

→ Why they’ve caught my attention this week

→ And the specific signals I’m watching going into the next few sessions

No guarantees in trading, of course.

But if you’re tired of chasing overcrowded trades and want to see where money could be rotating next…

Tune in to the Room Right Here

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