Passive Investment Strategy Unwind
- www.keystonecharts.net
- Feb 6, 2018
- 1 min read
When we were considering what could derail equities, our first thoughts were trade wars and passive investment strategy unwind. The recent rally in long rates has raised concerns in PIS and the year long trend line in TLT+SPY has now been broken.
Our first glimpse of this happening was looking at the long bond future and E-Mini S&P (long both in equal notional value). After hitting the top of the trend channel on January 29th, it has suddenly dropped below the bottom of the channel.
This began as the 30 year bond future broke its 200 week moving average. As you can see it has been pivotal support at key time in the last few years, and this is the first break since August '07.
The passive investment strategy shown using 10 year futures and E-Mini S&P shows the steep trend higher ever since equities bottomed during the financial crisis. There is still some room here before the channel is broken and we will want to keep an eye on these charts. Any questions or comments? email me at dave@keystonecharts.net
Charts using CQG - for more information email newtrader@cqg.com
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