Bonds: All Time Low Yields!

[trader99]

Quote from TheCaracal:



Bonds are near Jan-Feb 2000 levels for stocks; not far off from a top.

Think Nazz 4500; before the 5100 blowoff top.

Close; dollar drop will see to it. Just think bond bull born in 1982?

21 years of rising bond prices coming to an end? Easy bond bux made IMO; crumbs left for speculators.

Good luck,

David

Yep! The low in bonds were back in 1982 before the start of the stock bull market. Short term rates were as high 13-18%. Crazy. If people had bought 30yr zeros and held until now. That would be such a ride til now. But unfortunately I was like in 1st grade or something in 1982. haha.

But you could still trade it in and out bonds. 1994-1995. 1998. 2000-2003.

 

[trader99]

Quote from fan27:

Momentum is on Your side Trader99. Ride that Bond Bull! The market will tell you when its time to get out. A trailing stop might be a good idea.

fan27,

thanks! Hopefully I can ride it to 120 baby! But I might lighten up soon...

 

[The Answer]

Any other poll respondants?

 

[Rearden Metal]

Quote from fan27:

The Bond market is forecasting economic weakness while the stock market is forecasting economic strength. Given the divergence, I think the bond market is a more reliable leading indicator of economic activity.

Sorry, but you're dead wrong- there's no divergence at all. Historically, Bonds move in the SAME direction as stocks about 90% of the time. Bond & stock prices only tend to move in opposite directions during big panicy periods for stocks.

Remember the 90's? Bonds & stocks always tended to move in the same direction.

 

[Point Man]

The Answer,

My friend and colleague did a case study of the 1984 Bond trade that I speak of here. The formation that we have right now, is the same chart formation we had 19 years ago in the Bond Market. In 1984, we first had a false breakout to the upside followed by a 6 point dump. In February/March 2003, the high of the breakout from a symmetrical triangle was 11526. On April 7, 2003 the low of the break in the June Bond was 109.25 (6 points). Everyone and their brother was bearish. Reviewing the case study of 1984 and being bullish was a beautiful thing. Myself and my mate were in our own camp. The objective for this move is a 135-136 handle. The last 7-10 points will come fast and hard. I would look to take profits at the 123-124 level. Look to buy back with both hands a 38.2%-50% correction from the 10925 lows to the high of this move, hopefully 12320. They laughed at me 19 years ago. Now the players listen to a 47 year old man. The T-Bond is a great trade dominated by the computer about 4 to 1 computer to pit. You can actually buy the lows or sell the highs of moves on the computer and not have to give up a tick to get in and a tick to get out to the bloody locals. Good luck. Keep the faith. IF YOU ARE NOT LONG YOU ARE WRONG.

 

[Pabst]

Quote from Rearden Metal:



Sorry, but you're dead wrong- there's no divergence at all. Historically, Bonds move in the SAME direction as stocks about 90% of the time. Bond & stock prices only tend to move in opposite directions during big panicy periods for stocks.

Remember the 90's? Bonds & stocks always tended to move in the same direction.

In the 80's as well. Tumbling rates was the impetus for the big Bull, much as now.

 

[The Answer]

Quote from Point Man:

The Answer,

My friend and colleague did a case study of the 1984 Bond trade that I speak of here. The formation that we have right now, is the same chart formation we had 19 years ago in the Bond Market. In 1984, we first had a false breakout to the upside followed by a 6 point dump. In February/March 2003, the high of the breakout from a symmetrical triangle was 11526. On April 7, 2003 the low of the break in the June Bond was 109.25 (6 points). Everyone and their brother was bearish. Reviewing the case study of 1984 and being bullish was a beautiful thing. Myself and my mate were in our own camp. The objective for this move is a 135-136 handle. The last 7-10 points will come fast and hard. I would look to take profits at the 123-124 level. Look to buy back with both hands a 38.2%-50% correction from the 10925 lows to the high of this move, hopefully 12320. They laughed at me 19 years ago. Now the players listen to a 47 year old man. The T-Bond is a great trade dominated by the computer about 4 to 1 computer to pit. You can actually buy the lows or sell the highs of moves on the computer and not have to give up a tick to get in and a tick to get out to the bloody locals. Good luck. Keep the faith. IF YOU ARE NOT LONG YOU ARE WRONG.

Thank you for the missive and Great Call!

 

[Rearden Metal]

Quote from Pabst:



In the 80's as well. Tumbling rates was the impetus for the big Bull, much as now.

...so now we have guys who assume that stocks and bonds are SUPPOSED to move in opposite directions. I like it. This kind of bearish thinking is what's going to help get this stock market moving up again.

 

[trader99]

Quote from Pabst:



In the 80's as well. Tumbling rates was the impetus for the big Bull, much as now.

Hmm... Well, the tumbling rates of the early 80s were from a much much HIGHER point than what we are now though(high as 13-18%!).

I don't think the picture for the stock market is clear right now where we are headed. But it doesn't matter. I trade what I see not what I think. And it has helped immensely.

Either way, I hope to capitalize on it big time and loaded it up when it is clear where it's going.

 

[AAAintheBeltway]

There are good reason for the correlated moves of bonds and stocks in the 80's and 90's and their divergence now. The big threat in the earlier period was inflation. Inflation meant higher rates and that was poison for stocks and bonds. Now the fear is deflation, good for bonds but poison for stocks. Also we have the flight to quality trade, and its converse, the equity allocation trade. Sell bonds, buy stocks or vice versa. This is a good example of why intermarket analysis can be a dead end.