Stock market today: S&P 500 climbs as ongoing AI-led rebound pushes tech higher
This chart compares the relative strength of Stocks to bonds by creating the S&P 500/10-Year yield ratio (SPX/TNX) on a monthly basis, since the mid-1970s.
The stock/bond ratio’s trend has been up for the past 34-years, following a resistance breakout in the early 1980s. Nothing of late has changed this long-term bullish trend, which is experiencing a major support test right now at (1).
Over the past 3 years, the ratio has traded sideways, where it could be creating a head-and-shoulders topping pattern. Softness in the ratio of late has it testing 34-year rising support and potential neckline support at the same time at (1).
At this time, support is support. If it fails to hold, it would suggest a long-term trend change is in play.
What the ratio does with support will send very a very important message to stocks, bonds and asset allocation models!