We posited yesterday that after over a year of constant bond market manipulation (the latest instance), TPTB had broken the link between lower interest rates and lower stock prices. It was a strong positive correlation that we wrote about quite some time ago in forecasting a stock market correction (that obviously never happened.)
That correlation worked both ways insofar as rising interest rates were often (but, not always) a sign of a recovering economy and, hence, stock market rally. The correlation broke down altogether in early 2014 when interest rates fell, but stocks continued soaring.
We wondered whether it would, thus, be difficult to reestablish the correlation (or, at least the perception thereof) in the event that rates continue to rise (and, bond prices fall.) The past two weeks have suggested it might just be.
China broke down again — and, recovered again — overnight. While, CL is again faltering. The rising wedge that became the rising red channel is now a broken channel, and CL is solidly back in the month-old falling white channel (though the rising purple channel bottom isn’t far below at 57.59ish.
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