Always consider hidden risks
Stocks to Bonds Ratio : Highest Ever ?
June 29 ( From Stockcharts )
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Since the beginning of the financial crisis, the Federal Reserve has been obliged
to inject tons of liquidity into the system. Financial assets like the SP500 had a
very good performance indeed; the correction lately has not been enough in
terms of valuation compare to interest rates.
Even the main technical indicators like the Ratio of the Mighty SP500 ETF IVV
( iShares Core SP500 ETF ) compare to the TLT ETF ( iShares 20+ Year
Treasury Bond Fund ETF ) are pushing valuation to the limit on a ratio basis
as history suggest.
The Bearish price impulse in the TLT since April 22 2015 are telling me that stocks
still appear even more on the expensive side as you may see in the chart below...
Observe the break down on May 5 of the rising channel that
started back on December 2013 on the TLT.
( See second chart below - Amber Trendline Ellipse.)
We broke the 20, 50 and 200 DMA ( Day Moving Average ) since April 22, a bad omen for bonds.
But the most interesting factor is that the Ratio of the Mighty SP500 ETF IVV compare to the TLT ETF reached the highest level since 2007 as shown by the chart below. ( See first chart below - Red Trendline Ellipse.)
In fact, the previous 2 times that this happened ( July 13 2007 and December 31 2013 ), SP500 started a major correction in the following weeks. ( See first chart below - Bottom Panel - Grey Vertical Trendline - Ellipses)
Stocks to Bonds Ratio :Highest Ever ? $SPY, $IVV, $TLT #Trading #ivv #tlt #SP500
SP500 ( iShares IVV ETF ) over TLT ( iShares Treasury Bond )
20 DMA ( Yellow Line )
50 DMA ( Red Line )
2000 DMA ( Green Line )
SP500 Index - SPX ( Bottom Panel - Candles )
TLT ( iShares 20+ Year Treasury Bond Fund ETF )
Daily Chart ( Candles )