Here we are, again. Is this a true breakout for Treasuries and the Dollar, as you can see the clear basing patterns and attempted breakouts today? Those breakouts likely put pressure on equities further. Or, is this a head fake before they roll over? A key question and defining moment to consider the rest of this week and beyond.
I will delve into this more on the recap after the bell, but the bulls once again are making a valiant attempt to step up for another higher low. The scenario where stocks rise with bonds and the Dollar has been once I have been entertaining for a while, but it has not yet really developed. Perhaps the back half of 2012 is when it will…
___________________________________
___________________________________
@chess, check 2010. I think you the scenario you are discussing and it ended with TLT being taken to the woodshed after Jackson Hole. That is if memory serves me correctly.
There could be serious longer term changes taking place here. Equities, the dollar and the euro cannot continue with their old correlation. It either has to break down, or it has to change into something else. Rumors of European bailouts cannot be met with 100% certainty of a rally in equities and therefor a rally in the Euro.
We could certainly see the market revert back to the old way of equities being long term positively correlated with the dollar. Problem is that said event could easily take a year or two to sort itself out and the mean time we’re left with a whole lot of nothing. But right now I feel like there is just slowly less and less information to be gleaned about equities by looking at dollars/treasuries.