Bond Market Confidence at a Critical Juncture
Martin Pring is founder of Pring Research and author of the “Intermarket Review,” a monthly global market report revered among analysts and market technicians. Here, Martin shares a portion of his latest technical analysis.
Bond market investors express their confidence in the economy by bidding up lower quality bonds against high quality ones and vice versa. The following chart features three of these relationships and shows they are all, to some extent, resting above long-term support, as represented by the red trendlines. A rally above the three green trendlines would indicate a trend of growing confidence and a positive vote for the economy. This would be bullish for stocks and commodities. On the other hand if, as seems more likely, the three red trendlines are penetrated, this would be quite a serious financial event since it would signal a renewed trend of deteriorating confidence is underway. Given the length of the red versus the green lines, this would represent a much more ominous signal.