Bonds have been catching a bid since the beginning of 2014.
Bonds seems to have printed a 26 day left translated daily cycle low on 12/30 and have been trending higher. Due to the lack of a defined declining trend line we do not have a trend line break to confirm a new daily cycle. The bullish crossover on the True Strength Indicator does signal a new daily cycle. A break above the declining 50 MA will confirm a new daily cycle.
Stocks and bonds have been diverging since July, 2013. Bonds appear to be forming a new daily cycle and now we see a bullish crossover on the weekly True Strength Indicator. This signals that a new intermediate cycle could be forming. A break above the declining (red) trend line confirms a new intermediate bond cycle. And a break below the (blue) trend line confirms an intermediate equity decline.
Oil printed a failed intermediate cycle today.
Oil was smacked pretty hard the previous week and its no surprise to see more bearish follow through this week. Oil printed a 29 week intermediate low late December. Now at week 6, oil has broken below that intermediate low. This signals a failed weekly cycle. I believe that this will also lead into a yearly cycle decline.
Stocks and oil have been rallying in tandem since June, 2012. However, oil has been diverging from stocks since September. With a failed weekly cycle, oil appears to be heading into a yearly cycle decline.
And perhaps foreshadowing a downturn in equities …