The correction is on for the U.S. indices, led by big losses in the DJIA and S&P 500. For the first hour of trade, things are looking ominous. A 200 point sell-off in the DJIA and twenty point loss in the S&P 500 have put an exclamation point on the early action. Growing bond yields are being credited for the sudden reversal in market sentiment.

It has been a theme for the last few months, but bond yields are on the rise. U.S. Treasuries auctions from earlier this week have pretty much told the tale. Here is a quick look at the week’s debt market:

Security                              Previous      Actual

3-Month T-Bill                        2.180%         2.175%

6-Month T-Bill                        2.320%        2.335%

4-Week T-Bill                          2.105%       2.080%

Short-term yields have beentrending higher for some time. However, the big news is the performance of the 10-Year Treasury Note. Earlier today, it hit 3.21%, the highest level since 2011.

It is no surprise that U.S. Treasuries are becoming attractive given the FED’s stated plan of tightening for the next 18-24 months. At the moment, it appears we are witnessing institutional capital taking a fancy to debt.

E-Mini S&P 500 Technicals

Heavy selling has driven December E-mini S&P 500 futures toward several daily downside support levels.

Here are the key areas to watch for the remainder of the session:

• Support(1): Daily SMA, 2903.50
• Support(2): 62% of September’s Range, 2899.00

Bottom Line: Today’s pullback doesn’t come as a complete shock. After all, what goes up must come down — but the scope is a bit alarming. Rising bond yields and a selloff in the tech sector have brought the U.S. indices back down to earth very quickly.

For the rest of the session, a counter-trend scalp from the 62% retracement of September’s range is solid trade location to the bull. Buys from 2899.75 with an initial stop at 2897.75 produce a fast 8 ticks using a 1:1 risk vs reward ratio.