Charts That Make You Go Hmmm... (SPY/TNX)

Thank you to all my followers that take the time to read this with me.

Some historical background on the importance of the 10 year Treasury Note Yield Index. (Hey, we all need to brush up on it from time to time)

This is a ratio chart of SPY/TNX with a 9 year trend. As is the case with most charts related to interest rates, it's pretty technically perfect.
I've always found this interesting because this is a market that is almost 100% Fundamentally driven, yet produces the cleanest technicals, but I digress.

I just stumbled across this ratio chart, as interest rates are increasingly on my radar. I think the chart is self-explanatory for the technicians out there.

Lastly, let's play 'Guess-That-Pattern' on the weekly 9-Year chart. Good luck to all.

Commentaire:

Basically what this implies is that the entire rally since the early 2016 lows will turn out to have been a blow-off top. Recall what I said at the outset: The high in the ratio was made in mid 2016. The action since has placed 2 bearish patterns: 1. The trend line break 2. The heads and shoulders pattern.

Now let me clear: I’m not calling for an immediate collapse here, but I’m pointing to a possibly huge structural relationship between bonds and stocks, one that will likely take years to play out. But the signs of trouble are already in this chart.

Bottom line: Bulls need yields to drop sooner rather than later or this market party may come to an abrupt end with deep reaching consequences.

There may be hope in the short term as the ratio is about to reach critical support: The Blue Line

Commentaire: