Stock Market Vs Bond Market

I primarily use my weekly fundamental coincident indicator to see how it matches up with the
weekly action of the stock market. But the indicator tells a tale regarding the bond market as well.
The indicator is a forward looking compilation of weekly data that suggests probable economic momentum in the very short term. So, when the indicator weakens or flattens out, it tends to help
the bond market more than the stock market. In addition, when the oil price rises fast enough to
lead to an acceleration of inflation which eclipses the  momentum of the average hourly wage, the
bond market takes that as a sign the economy may weaken. Such has happened recently in both cases,
so it is interesting to compare the relative strength of the SP 500 against the long Treasury.
SPY vs. $USB

You will note the chart shows the SPY in a toppy mode while the long bond, with the bondos
sensing a coming loss of economic momentum, is trying to put in a short term price bottom.

The weekly coincident indicator can follow a random walk in the very short run, so the
the leveling off of the indicator may only mark a temporary respite before the indicator resumes
its uptrend. If not, and the economy is set to turn a bit more sluggish down the road, the bond
may gain in relative favor. Watch carefully over the next several weeks.

Note as well that the chart shows when the Fed stopped quantitative easing toward winter's end
in 2010, stocks followed in the spring with a significant correction while the bond rallied
strongly. There, that's another good reason to watch stocks vs. bonds in the weeks ahead.