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To: chainik who wrote (130549)3/10/2006 1:33:30 PM
From: Henry J Costanzo  Respond to of 209892
 
Not a discussion I want to be drawn into.....or that, I suspect, Shack would appreciate on his thread........so just want for the record to note a LARGE disagreement between us.....gg



To: chainik who wrote (130549)3/10/2006 1:52:08 PM
From: Shack  Read Replies (2) | Respond to of 209892
 
Uh so why are bonds at 3 year lows while the SPX is at 5 year highs? Bond prices peaked in the Summer of 2003 and have sold off since. The SPX was 300 points lower.

We've discussed this a few times before on this thread, even if you are calling the bond market direction correctly, the correlation that you are putting forth simply does not reliably exist.



To: chainik who wrote (130549)3/10/2006 2:14:40 PM
From: Win-Lose-Draw  Respond to of 209892
 
TNX is inversely correlated with major indexes.

That is not even theoretically possible. One is rangebound, the other is not, and they both auto-correlate, so you have to go through some seriously insane mathematical contortions before you can even get to the stage where you're ready to run a correlation test. And what you get out the other end is junk.

Bottom line: "correlation" is a meaningless term when comparing something rangebound with something unbounded.