Divergence With Bonds Hints at Potential Decline for Stocks

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Market Overview Analysis by Michael Kramer covering: S&P 500, Citigroup Inc, JPMorgan Chase & Co, Wells Fargo & Company. Read Michael Kramer's latest article on Investing.com

, but we have gone nowhere now in a week, so the bulls are making no progress. The question in front of us is which way the index will break, and for the past several weeks, we have been able to rely on bonds to give us that answer.

From what I can tell, we have seen this happen a few times, on September 10, September 14, and September 19. Each time, the S&P 500 was lower in the following days because bond prices kept falling. If bond prices keep falling, I think the S&P 500 will find itself lower, too.. That is what I think propelled stocks higher and caused the divergence. Once the VIX declines slowed, the S&P 500 rally ran out of gas.

Stocks gained, and bonds fell yesterday on US and allies’ efforts to de-escalate tensions in the Middle East. Yet Israel told the US ‘to embrace for a long war’. We know that no...

 

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