This chart helps show good times to change weightings between stocks and bonds. Right now the markets are at a critical juncture and if the downtrend line gets broken to the top then that would be a confirmation signal that treasuries should be overweighted and stocks underweighted. This would be set until a confirmed trend can be established at which another trendline could be used to help show the next flip flop.
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Trendline was tested and then rejected, therefore it is not yet time for bonds. However, trendline and strategy remain intact and will continue to be watched.
ReplyDeleteObviously with the selloffs that occurred, this ratio has triggered a buy signal at the end of July. Treasuries should be overweighted at the expense of stocks.
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