Chart Watch: US Dollar, Treasuries, and Stocks Flash Caution

With all the back and forth in the markets, several key assets have struggled of late. Notably, the US Dollar, US treasury bonds, and US equities.

Active investors have been more inclined to sell rallies in each of these “big 3” assets. The biggest pullbacks have come in the US Dollar and 20+ Year Treasury Bond ETF (TLT), while the S&P 500 (SPX) has simply moved sideways, failing several times to break out with conviction.

In the chart below, you can see that each of these key assets has been slipping lately. In fact, all three are falling out their repective rising channels. And as the market sets up to rally this morning, the question remains:  Will the rally in equities simply be a backtest that gets sold? Or will U.S. decouple from this theme?

US Dollar vs Treasuries (TLT) vs S&P 500 (SPY)

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bonds dollar stocks rising wedge patterns may 2015

One potential reason for the selling is Europe – and in particular, the Euro and European yields. Following a monster selloff, the Euro is rallying (call it a relief rally), and this has been hitting the Dollar. As well, European government yields have pushed higher recently and US yields have followed behind.

Keep an eye on these key “big 3” U.S. assets. Thanks for reading.


     Follow Chris on Twitter:  @KimbleCharting

Author does not have a position in any mentioned securities at the time of publication.  Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.