Head and Shoulders are Nice, But What About Bonds

• Posted by Greg Harmon
• on August 3rd, 2011

Peter Brandt has written a great technical series about the breakdown in the $SPY through the Head and Shoulders Neckline and trend line support from the March 2009 lows. There is a link below that I urge you to read if you have not already. These two breaks are extremely important for technicians and will either complete or not over time. But there is an equally interesting story playing out in the market in the relationship between Stocks and Bonds. Notice the inverse relationship between the $SPY and the iShares Barclays 20+ Year Treasury Bond ETF, $TLT from the chart below.

As the two almost touch today it is important to realize that as many have been focusing on the $SPY, the $TLT is nearing major resistance at the top of a 3 year symmetrical triangle. The first attempt to break out higher failed today, but the weekly chart, below, still has two more days to try to hold over the rail. As it fails the $SPY is acting inversely. Should the $TLT fail at the rail and drop and the inverse relationship continue to hold, the $SPY may be at the bottom. Keep an eye on this relationship as well. These two views are creating a major battleground for the $SPY. Which will win out? Time will tell.

Peter Brandt Chart Breakdown Ushers in Bear Market in U.S. Stocks

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus