If the ratio resistance can hold and starts to roll over, TLT is preferred (performs better than SPY). Otherwise SPY is preferred. The chart suggests some similarities between now and May 2008 (the ratio RSI and MACD profile), but this time SPY has been able to hold up much better.
Significant Global Market Changes may be occurring. The Key Reversal on 4/27 in Stocks remains notable. Thus, the 2126ish level is definitive Resistance. Recent Rebounds don’t change the preferred tactical pattern. However, downside should ideally be renewed shortly and, for a truly negative outcome, the lows of 5/6 at 2068ish would need to be revisited and then...
This ratio broke out (for now), a first since 2014, and might be the first step towards a major trend change (that SPY is better than TLT, or SPY is less bad than TLT).
Not much to say, not much science behind it.
Looks more and more likely it is rolling over. Last 2 times when this happened, SPY dropped 7.8% and 5% respectively. So far SPY has dropped 3%. More likely it has more to go lower, but market seldom provides a clean-cut.
SPY/TLT daily appears to be rolling over. SPY Pink support breakage + SPY/TLT 10 day MA breakage + negative MACD will trigger a short signal (so far, not yet).
Technical profile is similar to that of May 2008. But we need to have an open mind about a possible breakout. We should know the outcome this month, or in March. Generally, a breakout is good for stocks, bad for bonds, and a breakdown is good for bonds and bad for stocks. Keep in mind that stock and bond can go same direction at different pace, so the ratio cannot...
A close above 2060 and we will be looking for buy triggers on a lower time frame. See our weekly outlook: youtu.be
SPY and TLT had some large moves recent days, but on the chart it is just a blip. But I will pay more attention if the ratio can go back above the pink line or above the 10 week moving average. Right now it is not there yet and the down trend is well established. I will assume the trend will continue until it is visibly changed.
Similarities: . SPY/TLT death crossed. . TLT faces major resistance. If history repeats, expect: . TLT may go side way and range bound for some time (for a year?) . TLT eventually may spike to $150-160 range. . Continued decline of SPY. Also, based on the death cross of SPY/TLT, SPY might have peaked last December.
SPY/TLT breakdown just happened this week (3 days to go till Friday close). Last two instances occurred in June/July 2008 and August 2011. See chart for SPY correlations. Watch thick blue line VERY carefully!!!
The TLT/SPX ratio has been a useful tool to anticipate market crashes in the past, and I'm seeing several signs suggesting a renewed risk-off period. This ratio broke a 28-month-long trendline in October after having hit its 2007 lows back in January. The 200-DMA provided support in November, leading up to the most recent market correction two weeks ago. The...
SPY/TLT shows the comparison of the price action of SPY and TLT. It looks like the money flows into TLT instead of SPY. This could be an important indication of future weakness of SPY, but is not a sure sign. This means that you could be fooled by this chart, but more caution is good advice here.
As of market close today (Friday), TLT broke out and TNX (10 year rate) broke down.
Looks more and more like 2008 and 2011. This Thursday and Friday are critical as I will learn if TLT is able to break out, and thus either validate or invalidate (at least defer it) this case. A further study reveals that during 2008 and 2011 TLT spikes, 10 year rate drops about 44%. If true this time, it should drop to 1.44%, coincident with 2012 all time low....
SPY/TLT ratio bounced back right from the support and may keep pushing up against the red resistance. Technically, this ratio is still weak given that it is still below 10 and 50 week MA, and its RSI is in a downward channel.
Last defense is the red trend line, so SPY bulls have no room for error... Stay tuned.
Expecting continued TLT strengthening, SPY weakening. Please see orange circles for technical indications.