Craig Thompson | Apr 04, 2024 06:20
As mentioned in last month’s newsletter, the current bull market that began in the first half of 2009, has advanced within a price channel (see chart below). When the S&P 500 has risen to the top of the channel it’s usually a signal that the market is longer-term overbought and ripe for a size able pullback. You can see that the index still has some room to run before reaching that level.
Below is a daily chart of the S&P 500 in the top panel. In the lower panels are RSI (a momentum indicator), MFI (volume indicator), and On Balance Volume (volume indicator). Here are my takeaways:
Bond Yields
h2 Inflation vs Deflation/h2Below is a long-term chart of the 30-year US Treasury Yield. Here are my takeaways.
Commodity prices are highly correlated with bond yields. Thus, if bond yields are poised to advance over the long term you would expect commodities to perform relatively well. In the chart below is the Inflation Adjusted S&P 500 Composite Index in the top panel and a relative strength chart of the S&P 500 Index relative to the Commodity Index in the lower panel. Here are my takeaways.
In the chart below is the CRB (Commodity) Index in the upper panel and the 10-Year US Treasury Yield in the lower panel. Here are my takeaways.
Below is a one-year chart of the 10-year US Treasury Yield in the top panel. In the lower panels are relative strength charts of a select group of sectors relative to the S&P 500 ETF (SPY (NYSE:SPY)). Here are my takeaways.
Energy typically performs well in an inflationary environment. Below is a 4-year chart of the Energy Sector (NYSE:XLE). Here are my takeaways.
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