Pacific Park Financial Inc. | Mar 28, 2013 03:04AM ET
I came across an interesting fact on the news wires recently. The S&P 500 has corrected at least 5% at least one time in the first 5 months of every year since 1996. What does that mean? It implies that the probability of seeing the benchmark fall to 1485 from 1565 is greater than any of us might like to believe.
Nobody knows whether or not a run on European banks will create more sellers than buyers of U.S stock assets. For that matter, 2013 may defy every probable outcome and every warning sign.
On the other hand, safety-seekers appear interested by U.S. treasuries once again. The iShares Barclays 20+ Year Treasury Bond Fund (TLT) is further above its near-term 50-day moving average than at any point since the fiscal cliff concerns that jockeyed alongside the November elections. Additionally, TLT is demonstrating greater relative strength via its RSI Index than at any point since those same November dates.
Perhaps surprisingly, intermediate-dated treasuries have held up rather well throughout the stock bull of 2013. In spite of consistent commentary that forewarned imminent rises in yields circa mid-February, iShares 7-10 Year Treasury (IEH) and iShares 3-7 Year Treasury (IEI) have seen the 50-day slope turn higher since February. More recently, the respective slopes have turned positive — a potential “buy signal” for many technical analysts.
Right now, investors continue buying into every sign of S&P 500 weakness. If Treasury Bond ETFs continue to climb, however, don’t be shocked if the smart money begins selling into S&P 500 strength.
A Comeback For Treasury Bond ETFs?
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