Don't Ignore This Chart

Correlation between Stocks and Bonds Turns Positive

Stocks and bonds are both having a good year with the S&P 500 SPDR (SPY) up 11.91% year-to-date and the 20+ YR T-Bond ETF (TLT) rising 6.53% since January. The advance in SPY has been much steadier than the choppy advance in TLT, but both sport nice gains so far in 2017. This is a bit unusual because bonds are normally considered safe-havens that benefit in a risk-off environment. Stocks, in contrast, are risky assets that benefit in a risk-on environment. The indicator window shows the Correlation Coefficient (SPY,TLT) turning positive in June and staying positive most of the last two months. It is an unusual situation, but we should keep an open mind and stay bullish on the price charts until there is evidence of a trend change. SPY has key support in the 240-241 area and TLT has key support in the 122-123 area. 

Thanks for tuning in and have a great day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan


Subscribe to Don't Ignore This Chart to be notified whenever a new post is added to this blog!
comments powered by Disqus