Charting Stocks

The yield on the 10 year treasury sunk to a 50 year low this week. It’s important to pay attention to moves in the treasury yield. If investors are panicked, they are more concerned with safety and less concerned with returns. Because price and yield are inversely related, when demand increases and the price for bonds rise, the yield declines as investors are willing to accept lower rates of return in exchange for safety. The collapse of the 10 year treasury yield shows that fear still dominates.

S&P 500 bounced off of it’s 2002 low. Considering the technical and psychological importance of the previous bear market low, it seems to be a reasonable level to expect buyers to enter the market. They did. I wouldn’t get very excited about it. Bear market are notorious for violent countertrend upside rally’s (suckers rallies).

Gold remains in a strong multi-year uptrend. With the addition of $8+ trillion in new government obligations, one has to wonder how much longer before we see new highs.

Related posts:

1. Chart: 3 month Treasury (T-Bill) Yield
2. Stocks: Oversold Rally Will Soon be Tested
3. Dow Jones: Why 5% Rallies Aren’t a Good Sign
4. Investors Buy $32 Billion in Treasury Bills with ZERO Yield
5. Inflation vs Deflation: How to Know Which One to Worry About