30-year bond has created what looks like a “descending triangle” in the bottom half of the chart below. 65% of the time this leads to lower prices. Is it possible that Bonds break down out of the pattern and stocks break out to the upside?
CLICK ON CHART TO ENLARGE
It may not seem “PROBABLE” yet it is “POSSIBLE!” Have no idea what the news would be to cause this situation, don’t care either….yet I will follow these price pattern breaks should they happen!
I think the S&p rolls over. (Bac) is dropping like a rock..
Insiders are running for the hills…
Check out the relative performance of discretionary stocks of late.
Cast my vote to big move up.
Captain John
What is the correlation between stocks and bonds? Over short periods (a few months) I’m not sure there is a strong one? The TLT chart looks like it has peaked, but there may not necassarily be an implication for equities yet.
Seems like the lower prob. is always winning with tech analysis these day. If that continues I say the 45% chance bonds break higher wins!! ….. Look out below Stocks.
Chris,
A technical question. Pardon my ignorance but is there a difference between a wedge and a triangle?
Seana,
I think the bulls are all in. Most mutual funds are near 0 cash.
But the average 401k is out and aint coming back soon. And endowments, pension funds, insurance companies, are all reducing their equity exposure. And insiders are selling about 1,000 shares for every one they buy.
The big buyers recently seem to be shorts covering.
The bulls are counting on the 401k crowd to provide the dumb money push the market needs. Good luck with that.
One thing that I keep reminding myself of is Barry Ritholtz’s chart of ‘4 stages of a Secular Bear Market’
http://www.ritholtz.com/blog/2009/08/aftermath-of-secular-bear-markets/
The chart is statistically driven. SnP 1220 represents 80ish % move off the lows, and we’re still waiting for the 25% drop from that recovery high. 25% of 1260ish puts us around 950. 1260 will bring every bull and there mother out with a serious swing in sentiment! JMHO:]
In the mean time… everybody wang chung tonite, everybody get long tonite;}
dkyro…yes a big upside wick took place yesterday, dow was up over 100 and close up around 30 (creating upside wick)
today dow was down what about 70, close around flat (creating a downside wick)
one day a trend does not make…was impressed that stocks and commodities did well today with the dollar up about .60%.
TLT got whacked over 1.5% (higher yields) and JNK/HYG both made money. Gotta love those high yields when prices remain strong!
Sorry, I meant to say SP500, not SPY. Anyway, just kind of kidding around.
What’s with this wicking? SPY now shows an upside yesterday and a downside today. Guess we have to wait for the probable to see the possible?!?! Market looks tired, but about that time it’s possible that it will be probable to get a 10% breakout!!
Bob,
Upside wicks at resistance is something to respect. See the “home on the trading range” post today.
This is a battle to see if enough buyers can break resistance.
Next week when QE to the 11th power hits the markets, all will be fine!
Chris,
The S&P made a neat pair of candlesticks for yesterday and today, the bulging parts seems to line up perfectly. Does that have any meaning, or is it just a curiosity? 😉