What do a $3.80 gasoline price, a 2.15 percent 10-year Treasury yield and a 20 reading on the CBOE Volatility Index have in common? They're all levels that could ring the bell on this rally.
Gas prices have been chugging higher for the past month, with the current national average at $3.78, according to AAA. That's just two cents from the magic $3.80 and a traditionally dangerous level for the stock market, according to Barry Knapp of Barclays and other strategists.
(Read More: Pro: Gas Won't Hit $5 This Year)
In fact, Knapp has a chart in one of his latest strategy reports that shows $3.80 a gallon for gas has historically been where the forward multiple of the S&P 500 index tops out. In other words, investors start paying less for future earnings in anticipation higher gas prices will hit company profits.
"A rise in gasoline was followed by a deceleration in consumption in the following quarter" in February 2011 and 2012, Knapp said in a note to clients.
Meanwhile, ten-year Treasury yields have jumped to around 2 percent this year amid concern that the Federal Reserve may end its quantitative easing plan sooner than planned. If this yield hits 2.15 percent — the average dividend yield for stocks in the S&P 500 — bonds suddenly look very attractive again to income seekers who have flooded into stocks.
"The fact that stocks have been yielding more than the 10-year has been a major argument in favor of equities over the past nine months or so," the strategists at Bespoke Investment Group wrote in a note pointing out these metrics colliding toward each other.
Why take the risk of owning a stock for its yield, when you can get the same comfort without that risk in a Treasury security?
The last number — the VIX — was thrust into the equation today as the so-called fear gauge jumped more than 20 percent to above the 19 level. The metric measures the price of puts (market protection) to the price of calls on the S&P 500.
A rise above 20 in the VIX in April 2012 and July 2011 signaled a jump in investor fear and presaged pullbacks in the market.
"If we got above 20 and held it for a couple days, then market would go a lot lower," predicted Jon Najarian of TradeMonster.com.
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