Indicator suggesting a 15% stock decline is close at hand? Different this time around?

Posted by Chris Kimble on 06/03/2011 at 7:07 am; This entry is filed under S&P 500, Yields.

Since 2007, when support was taken out on the 10-year yield, the S&P 500 fell at least 15% in the next 90 days.  With yield support breaking again, will stocks play a game of "Ketch-Up" to yields?

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Yields on the 10-year note have been a pretty decent indicator to which direction stocks were heading in the near future, as each break of support at (2) was followed by at least a 15% decline in 90 days. Now yields have broken support of a bearish rising wedge at (3).  So far stocks have not followed the breakdown in yields!

Is it "different this time" or are stocks about to play a quick game of "ketch-up" to falling yields?

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2 Comments

  1. Van June 3rd, 2011 at 12:06 pm

    Chris,

    what level would constitute a breakdown in equities? thx

  2. Chris Kimble June 3rd, 2011 at 12:41 pm

    Van…key markets, 500, Russell, NDX are setting on support going back to the 2009 lows. Using history as a guide, a couple of percent break would reflect something is going on.

    See the 6-pack in the link below…a Domino effect could take place if any of these key markets break down.
    http://blog.kimblechartingsolutions.com/2011/05/look-alikes-dominos-and-slippery-slides/