investmentwatchblog.com / BY IWB ·
by Dana Lyons
For just the 2nd time in 10 years, both stocks AND bonds are hitting 3-month lows.
This week, stocks began to exhibit some of the weakness of which our models suggested they were at risk. It hasn’t been manifested in the large-cap averages as much yet as they continue to hold within their recent months-long range. However, as we covered this week, small-capsand mid-caps have each exhibited potentially significant breakdowns. And another broad index that we can add to that list is the NYSE Composite. In early October, it broke its post-February Up trendline, softening up its rally support. And today, we see the index breaking below its September-October lows to set a 3 and a half-month low.
If we switch asset classes, we see an odd thing about this new low in stocks. Jumping to the bond market, we see that yields, specifically the 10-year Treasury yield, are hitting 5-month highs. Now, as bond prices move opposite yields, it strikes us as odd that bonds would also be hitting multi-month lows along with stocks. In recent years, bonds have been a reliable haven in the midst of stock weakness. To see both assets at new lows is certainly a change of character for the market.
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