Bond Rally Here Sends A Bearish Message To Stocks

Bonds have experienced a large percentage decline since the highs of last March. Have bonds fallen enough?

If they rally, could they be sending a bearish message to stocks?

This chart looks at Govt Bond ETF (TLT) over the past 20-years. TLT has created a series of higher lows and higher highs inside of the rising channel (1). An upside breakout took place last year as stocks started tanking in late January, as news of COVID started taking place.

The large decline in TLT currently has it testing the top of the channel, which now comes into play as support at (2).

A breakout by TLT at (3), would suggest that bonds push higher and it could be at the expense of an important decline in stocks!

(Click on image to enlarge)

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