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EW: Corrective Bonds Indicate Resistance On Stocks


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Hello traders!
Today we will talk about the bond and stock market and their correlations.

As you can see, US and German Bonds are moving more or less together and the same thing is with US and German stocks. Of course, there are no perfect correlations, but overall looking they are in positive correlation.
At the same time bonds and stocks are also more or less in negative correlation and again, there are no perfect correlations, but at the end they always somehow get caught.

Well, what we currently see fromElliott Waveperspective is that both, US and German bond market might be finishing their corrections, which would be limited for the stock market. So, if we are on the right path, then stocks may face a resistance, at least a temporary. US stocks (S&P500) may see a decline from the upperending diagonalline, while German stocks (DAX) may face a temporary resistance at the upper channel line.

However, this is not the case yet, but if bond market suddenly bounces and stock market declines in strong and impulsive fashion, then we should be aware of the potential risk-off sentiment that can lasts for some time.

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Be humble and trade smart!

BUND + 10Y US NOTES vs. DAX + S&500
bonds4hVSstocksD

Disclosure: Please be informed that information we provide is NOT a trading recommendation or investment advice. All of our work is for educational purposes only.



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About the author


Grega Horvat

 

 

  • Grega is based in Slovenia and has been involved in markets since 2003. He is the owner of www.ew-forecast.com, but before that he was working for Capital Forex Group and TheLFB.com. His feature articles have been published on: FXstreet.com, Thestreet.com, Action forex, Forex TV, Istockanalyst, ForexFactory, Fxtraders.eu, Insidefutures.com, etc. He recently won the award on FXStreet.com for Best Forex Analysis in 2016. At www.ew-forecast.com he helps clients and educate them about the Elliott wave prinicple and how to label and track unfolding patterns in real time.  His approach to the markets is mainly technical. He uses a lot of different methods when analyzing the markets such as candlestick patterns, MA, technical indicators etc. His specialty however is Elliott Wave Theory which could be very helpful especially if you know how to use it in combination with other tools/indicators.

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  • To be involved in the market effectively, you need the right guidance and resources, and our team can help you to achieve that. Our team is providing advanced informations about Elliott Wave theory in real time. The Elliott Wave Principle gives you a method for identifying the behavior of the markets and at what points the market is most likely to turn. We help new traders who are interested in Elliott Wave theory to understand it correctly. We are doing our best to explain our views as simple as possible with educational goal, because knowledge itself is power!


Gregor Horvat
Chief  Technical Strategist
Website: http://www.ew-forecast.com/

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