Over the past month, Bonds are up a bunch as the collapse in Interest Rates has resumed. We jumped on board this bond trade last month and so far it’s working.
Meanwhile, a majority of U.S. stocks are actually down over the past month. While the S&P500, Dow Industrials and Nasdaq100 have gone on to make new highs, the NYSE Advance-Decline line (stocks only) did not, Small-caps did not, Dow Transports did not, and a majority of individual stocks did not. It’s only a minority of names doing the work, particularly large-cap stocks and some higher dividend paying areas like REITs and Utilities.
When you run the numbers, most stocks in the U.S. are down over the past month, with negative average and median returns for the Russell3000 components. It’s the bonds that are up and I think they’re just getting started.
Today’s chart focuses on the Intermarket Relationships we lean on to supplement our absolute price analysis. With rates rolling over again, are stocks and commodities confirming what the bond market is doing? In a simple answer: Yes! [Read more…]