Don Hays says bonds could be setting up for a big rally:
<<< Could this overvalued stock market
have been waiting on a bond market that was positioned for a BIG, BIG
rally? Years ago, we adopted a exponential moving average momentum
calculation that O.S.C. Coppock, an English market statistician developed,
and have applied it over the years to sectors, stock markets, and bonds.
Our adaptation blends a 14 and 11-month exponential moving average of these
criteria. Mr. Coppock 30 years ago used it almost exclusively for the Dow
Jones Industrial average, and his thesis was that it was his most accurate
confirmation of the start of a bull market. In our opinion, it was a
little too much "after the fact," and our study of the combined psychology,
monetary, and valuation was much more timely for stocks. But even with
that slant on it, we have found it extremely useful for bonds.
In the months ahead, when I get my web site developed, I will show you
this gauge, but as for now, take my word for it that any time this momentum
for bonds drops to a certain (oversold) level, and then turns up, it has
produced a major bullish move for bonds. In recent years this has only
occurred at the beginning of the big rallies in 1981-82, 1984, 1988 and
1995/ Just like with the stock market, it typically is a few months after
the fact, but it gives tremendous confidence for bond investments and gives
plenty of time to capture most of the gains. The bad news is that it has
not turned up yet. But the good news is that it finally this month has
dropped under the critical -100 level. In other words the trigger is
cocked. >>> |
