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What do the three largest declines in the S&P 500 since 2007 have in common? It doesn’t have to do with the VIX being low! It doesn’t have to do with bullish sentiment being high either? Have any thoughts what these declines have in common?
The top chart is the yield on the 10-year note (inverted). By inverting the chart, you get the looks of what Bonds look like over the past 10-years. This chart reflects that the inverted yield is on support line (1). Of the three different times the yield has hit support line (1), the S&P 500 has declined each time. Two 15% declines (2010 & 2011) and a much larger decline in 2007.
At (2) in the chart above…Yields are back at this key line…Now what happens???
A rare situation that hasn’t happened in 3-years, that has led to large moves in the bond market/interest rate complex is at hand right now.
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