The Relationship Between Stocks and Bonds

Some traders/investors think that when stocks go up bonds go down, the reverse if stocks are going  down.  This  is  not always  true.  Sometime stocks trade inverse to bonds, sometimes  they trade together.  If  on 10/24/22 US government treasury bonds made an intermediate bottom it’s rally could correspond with  US stocks rising.

The I-Shares 20 – year Treasury bond – ETF (TLT) is  a  good  proxy for the US government bond market.

The weekly TLT and S&P 500 (SPX) chart courtesy of Trading View illustrates  their long – term relationship.

For several weeks TLT and SPX can have an inverse relationship, or they can trend together for several weeks.

The daily TLT and SPX chart  focuses on the short-term view.

The most recent TLT rally corresponded with the prior SPX multi-week rally.  The TLT rally lasted 30 – trading days. 

Adding 30 – trading days to the TLT 10/24/22 bottom targets 12/06/22 as  a potential TLT top.  If stocks move up with TLT, the SPX could peak on the same day or one week before/after 12/06/22. 

Published by Mark Rivest

Independent investment advisor, trader, and writer. Articles have appeared on Technical Analysis of Stocks and Commodities , Traders.com Advantage, Futuresmag.com, and Finance Magnates.

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