|E-mini March S&P (barchart.com)|
Oil is getting killed this morning and I think the market likes that. April crude is down 2.91% at $99.72 and ES is now only down 0.19%. The second chart shows how T-Bonds predicted the S&P's correction (imo). Look how they rose in tandem in the beginning of February, but suddenly diverged when the S&P put in its blow off top, DeMark style (S&P went down/T-Bond went up).
Is it just me, or were Treasuries predicting a deflationary response from the oil spike. At that time (2/24/2011) there was political unrest in Egypt and Libya, so I'm thinking it was oil/dollar risk that made T-Bonds a more attractive safe haven. I have a forward looking question. What happens to interest rates if QE2 ends and/or the economy slips into recession. Soros and Pimco's Bill Gross think interest rates rise.
ZBH11 (Treasury Bond future) vs. ESH11 (S&P future)
|Chart courtesy of Barchart.com (direct link)|
NIKKEI 225 Index (NKY)
Chart courtesy of Bloomberg.com (direct link)