I found this useful pattern between bond yields and stock prices. It can be recognized over a period of 6-12 months.
- Rising bond yields are followed by a peak in the stock market.
- A peak in the stock market is followed by lower bond yields.
- Lower bond yields are followed by higher stock prices.
- Higher stock prices are followed by higher bond yields.
- Go to 1.
Right now yields are rising. We are in step 1. above. They will continue to rise until the market shows a visible decline.
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George Dagnino, PhD
Editor, The Peter Dag Portolio
Since 1977
1 comment:
Dear Dr. Dagnino,
In this cycle, I see that the stock prices peak during step 1. When will they start their decline and continue to decline?
I am confused because step 3 again shows that the lower bond yields are followed by higher stock prices.
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