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Aug 16, 2010: Update 5 – SP-500 vs 10 Year T-Bill Yield

Posted by pugsma on August 16, 2010

4:15 pm EST:  If you believe the Treasury market is the “smart money”, then the action in the 10 Year Treasury Note Yield ($TNX) is telling you to get the heck out of stocks on this final bounce higher before the next dip drop in stocks.  The action in Treasury’s look very similar to what happen in late 2008 before the March 2009 stock market bottom.  The $TNX dropped another -4.2% today and is nearing the lows of Dec 2008.  The rush into Treasury’s it saying, “I’m not convinced this stock market correction is over, and I want to protect my capital going into the fall of 2010.”   The low of the $TNX in late December 2008 led the low of the SP-500 by 3 months in March of 2009.  If history is repeating, then $TNX will bottom soon and stocks will bottom in Oct or Nov 2010.  

This is yet another reason, I have brought out the altnernate count for P2 correcting down to 951 or 870 (shown on the SP-500 daily chart below).   It bares watching closely.  The “smart money” seems to be scared to death that the ecomony is not going to catch on with a self-sustaining rally without some more pain first.    They are scared to death of the Sept and Oct stock market crash and are piling into Treasury’s at an unbelievable rate.   They could be right and we get a wash-out this fall, that helps to build bearish sentiment necessary for the next major bull leg (i.e. P3 up).

SP-500 vs 10 Year Treasury Yield (EOD 8-16-10):

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