PeakTrader.com Forum Index PeakTrader.com
Economics, Portfolio Optimization, and Technical Analysis
 
 FAQFAQ   SearchSearch   MemberlistMemberlist   UsergroupsUsergroups   RegisterRegister 
 ProfileProfile   Log in to check your private messagesLog in to check your private messages   Log inLog in 
Log inFast Charts

TNX & SPX

 
Post new topic   Reply to topic     PeakTrader.com Forum Index -> Market Forecast
View previous topic :: View next topic  
Author Message
administrator
Site Admin


Joined: 28 Dec 2005
Posts: 11966

PostPosted: Sun Apr 09, 2006 8:19 am    Post subject: TNX & SPX Reply with quote

This week, there are two Market Forecast sections. The chart below is a two month daily comparision chart of TNX (10-year bond yield; black line and right scale) and SPX (blue line and left scale). Over the past two months, there has generally been an inverse relationship between TNX and SPX, although both have risen.

Recent comments suggest that if TNX rises above 5%, then an SPX correction will take place. Currently, the TNX daily RSI is above 70, which is an overbought level. Also, the TNX MACD is bullish, although a pullback or consolidation can take place, while MACD remains bullish. Consequently, TNX may remain below 5% short-term, which may indicate an SPX rise.

TNX rose from roughly 4.75% to 4.85% shortly after the FOMC tightened Mar 28th. Currently, it's not much higher than the Fed Funds Rate at 4.75%. Consequently, TNX may not fall much below 4.85%. TNX seems to be pricing-in the expected Fed Funds Rate. The current 4.96% TNX yield may indicate about a 100% probability that the FOMC will tighten again and further tightening has not been priced-in.

When interest rates rise, the value of earnings become worth less, which is negative for stocks. Moreover, earnings growth is expected to slow, which is also negative for stocks. Consequently, a steep SPX correction may take place if economic reports show signs of economic strain and earnings guidance is lowered in Apr.

Back to top
View user's profile Send private message
Display posts from previous:   
Post new topic   Reply to topic     PeakTrader.com Forum Index -> Market Forecast All times are GMT - 8 Hours
Page 1 of 1

 
Jump to:  
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum


Powered by PeakTrader 2.0.8 © 2001, 2002