Chart suggests stocks are less vulnerable to another steep drop, but Treasury yields are still flashing a warning

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Falling 10-year Treasury yields spell trouble for stocks, JPMorgan warns

J.P. Morgan Chase's Jason Hunter doesn't think stocks are out of the woods.

But the firm's head of global fixed income and U.S. equity technical strategy believes they're less vulnerable to another steep drop. According to Hunter, the S&P 500's close above 2,800 on Tuesday provides a floor.

It's a level he highlighted in a chart of the 's daily closes on CNBC's "Futures Now."

"The 2,800 number — that's a key level. That's where the market broke down from. Not just from the March through May pattern. But also if you go back, it was the upper end of the range from the fourth quarter," Hunter said Tuesday.

That level may help provide stability, but Hunter warns 10-year Treasury yields have created "extreme" technical conditions that could signal more trouble for the broader markets.

He highlights it in this chart:

"It all started in early May," Hunter said. "But things really started to accelerate when the 10-year note started to break through 2.33%, 2.35%. That's the low-end of the yield range that really took place in March and May."

However, with stocks settling above the 2,800 level again, it could be a signal that balance could be returning to the Treasury market, too.

"After such a significant break at the 2.30% area, ... old resistance becomes new support. That's the new line in the sand," said Hunter.

In Hunter's research note on Tuesday, he wrote: "Based on recent sensitivities of indicator movement to one-day yield changes, the 10-year note backup from the 2.015-2.08% resistance confluence is likely to trigger a systematic sell signal."

On Wednesday morning, the 10-year Treasury yield was at 2.097% and the S&P was at 2,820 in the premarket.