SMP99

Long Bond to SPY Ratio

AMEX:SPY   SPDR S&P 500
Above is a look at the 10 yr Bond prices relative to S&P 500             . The purpose isn't to look for an exact top where prices or the ratio trend may reverse but instead to see where we've been in the past and where we are at currently. Breaks in the long term down trend of this ratio have lead to large moves in the SPY             , however, determining those breaks in the trend are likely easier to do in hindsight.

Its possible we are at or near breaking the current trend but again maybe the ratio continues to goes lower. In fact just recently the ratio made new lows during the month of November (lower than both 2000 and 2007). For now its worth watching the current trend that has developed from 2011. During the pull back in Oct, the ratio moved up to touch this trend and reversed lower after that touch.
Indeed needs to be cautious about stocks now. The question is if bonds can continue to rally with projected ratio breakout.
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SMP99 CosmicDust
I think so. 10 yr yields are still quite attractive relative to other countries. Couple that with what I thnk will continue to be a strong dollar and you have a high incentive for foreign flows to continue to US bonds.
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Makes sense... So Fed raising rate some time next year might be a non event after all, as in the mean time the Fed will continue to herd international hot money into US treasuries. Thanks!
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SMP99 CosmicDust
Right I think so. Here's a chart of just the 10 yr (what i used in the ratio). It has underperformed the 30 yr latley and could be due for some catching up. It looks like we could get a break out above the resistance area soon. If so, maybe a run to the old highs from 2012 throughout the 1st half of 2015. By the end of 2015, new high in the 10 yr price would not be shocking.
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I thought the same. Great work and thanks for sharing!
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SMP99 CosmicDust
Thank you. Glad to share.
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Here's closer daily look at just the past few years. Additionally, you could probably make an argument that the most recent trend broke with the selloff that occurred in Sep/Oct (as drawn here on the daily vs the weekly above). Again as noted before, this likely one something that will only be clear in hindsight as to when the exact trend line broke.
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Thank you
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SMP99 Technician
Quite welcome.
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