I am honored when my work gets picked up on other sites, I was especially humbled when Josh Brown shared one of my charts on his awesome site, “The Reformed Broker.” Josh shared the chart below with the title..”A warning from the Debts of Hell.” (see post here)
The article/chart discussed that a “breakdown in high yield prices and a breakout in the 30-year bond was taking place“… the last time this happened, which was back in 2007, stocks declined a rather large percentage!
The Wall Street Journal (WSJ) happened to pick up the artilce, questioning if investors should be concerned due to this type of analysis. (see post here).
The chart below highlighted that it was time to protect your assests, especially your 401k assets…NOW IS THE TIME!
CLICK ON CHART TO ENLARGE
Below is an update to the 6/1 chart…
CLICK ON CHART TO ENLARGE
In less than 60 days after the chart was produced (per the breakdown in high yields and the breakout in Govt bonds), the 500 index declined almost 20% in a couple of weeks, one of the sharper declines in U.S. History. This chart reflects that you can use the price action of bonds to help you construct portfolios, per when to increase or decrease overall equity exposure.
These two types of bonds suggested when to reduced risk…stay tuned to when they suggest to increase risk exposure again!
Congratulations! I think Mark Gongloff’s WSJ column finds great stuff and he has a big following. He’s more sympathetic to technical analysis than the chicken bone comment makes him sound. Won’t be surprised to see your charts there again. I second Luis’ request on Brazil’s market, and emerging generally.
Hello Kimbler, thanks for magnifics grafics and analysis. Please, if possible, make grafic and anlysis of Brazil – BVSP because we dont have a clear position on a trend. Thanks very much. Regards, Andre Brazil. =)
The Wall Street Journal…cool & cooler that there seems to be a slant of disbelief, people like to be surprised, a systematic approach takes their fun away.
There are no correlations that do not change over time, but there are linkages in time, that do make sense at the time
Carl… My bias/concern goes back to the dollar (weekly) breakout of a couple of weeks ago in the quiz.. This was a first for the Dollar, per a breakout of this weekly line in the sand. Which increases the odds a good bit that we are looking at counter trend rallies. CRX/CRB has broken support, which allows the Dollar on a rally to do more damage to the commodity areana.
JJC/FCX remain weak…none of these events really put much pressure on TLT. Shoe box indicators slipped even lower today!
All the best Carl,
Chris
Chris, the US Bonds/High Yields inverse correlation with Stock Markets has been astounding indeed. Do you mean that now that the Tbonds are at 140 again, as they were in the end of December 2008 we might see a new incredible rally in the stock markets again?
Or do you believe that the Bonds could even go higher: 141.9 on Sept 12, 2011 marked an all time high but also a (slight) breakout of the all time high of Dec 2008. I am sure you have some bias or don’t you? No you don’t as you always say 🙂