In my opinion at least there is a CLEAR correlation between interest rates and the stock market trend.
During 2000-2003 bear mkt, rates fell into the stock bear bottom in early 2003, then as CYCLICAL BULL rose, so did rates.
Rates PEAKED In early 2007, so did stocks. And as stocks declinded sharply into their 2009 bottom so did interest rates!
Rates double topped their 2009 highs near 3.88%, then began a decline that has taken the 10 yr back below 3% !!
Now some measures of supply and demand suggest very healthy trends and fortell of continued price appreciation for stocks, while others tell different story such as continued loss of volume on the rallies and EXPANDING volume on the declines. One of my services excuses this pattern...."because it has been present since rally began in 2009...."
WHat if some measures of strength as price TRIES to breakout become seen as a divergence to the action? WHat if new rally highs in some measures, and when price is not.......are actually a warning of impending decline.....not of impending new price highs?
SOme see evidence of trend for higher prices because with weak GDP stocks did not decline hard.....we are short term overbought. Breakout levels are above current price action in most indexes. CHinese stocks have moved off their lows.....jury is out....if we manage to get back to SPX 1170 area, IMHO the next leg down may be set if for once it isn't verified with expanding volume.
D
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