Who says history does not repeat itself?
The graphs of the stock market and bond yields keep following the historical script (click on graph to enlarge). The trick is to know which part of history follows the script.
I told you (see previous blogs) the rise in bond yields will be followed by a market decline. We are in the process of experiencing this event.
I also told you that a peak in the S&P 500 was going to be followed by lower bond yields. This is exactly what is happening.
What next? The peak in bond yields will be followed by a bottom in stock prices.
For those of you who read my book Profiting in Bull or Bear Markets this is the typical relationship you should expect between a leading indicator (the stock market) and a lagging indicator (bond yields).
The market bottom will take place when our indicators will become even more oversold. We are getting there.
More on http://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
1 comment:
What also would be interesting to look at in conjunction with this is credit spread. So perhaps the widening of the credit spread in conjunction with the increase in treasury bond yields might provide some additional timing factors (in terms of market turn) and/or magnitude factors (in terms of magnitude of the move.
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