I learned after watching a
Larry Williams seminar to watch for inverse correlations between the bonds and equity markets. Particularly to pay attention when bonds are trending down at the same time the equity markets are trending up (referred to as the "Jaws of Death", as the bond markets will end up snapping down the equity markets). In this example I'm using the TLT and DIA ETF's as a proxy for the bonds and Dow Jones Industrial Average respectively. As you can see the two have been trending in opposite directions, most dramatically since the beginning of December, forming the "Jaws of Death".
Though this isn't something that has precise predictive signals, it is worth taking note of, especially when one of the instruments is at an important technical level, as TLT is currently.
Watch the bond market for bottoming and volume tells. If the TLT breaks $89 we may get that volume somewhere below $89 and above $82 to support price. Remember, trends end in a climax!
The last time this correlation crossed over was July 15, 2009 (crazy if it crosses the other way a year to the day!). A few days after this cross we got a breakout and higher highs on the S&P500:
Wednesday is the last day of the month, how will that effect the markets until then?
