Stocks vs. Bonds – The Long-Term View

By Chris Ciovacco

QQQ vs. TLT Monthly

Clients and regular viewers of CCM’s weekly videos are familiar with the expression:

Harder markets are followed by easier markets.

The monthly chart below shows the performance of the NASDAQ 100 ETF (QQQ) relative to long-term Treasuries (TLT).   The orange box highlights a long-term period of indecisiveness; a period that ended with the bullish breakout in November 2016.

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The Net-Aggregate Opinion

The ratio above reflects a significant shift in favor of growth-oriented assets relative to defensive-oriented assets.  We are seeing a similar, but much longer-term breakout in the SPY:TLT ratio (S&P 500 vs. Bonds).  Notice how the ratio below peaked in May 2007, or four months before the S&P 500 peaked. As of this writing, there are no similar yellow flags waving.  We will continue to take it day by day.

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