We recently identified what appeared to be a rally setup in stocks. The post was made the day the lows occurred, May 12, and those lows have have not been taken out. We have indeed seen a sharp rally since so we’re due a little victory lap. The caution remains, however … indications are those lows are interim lows, not final lows. A bear market remains in force until otherwise shown.
Our less tentative take on bonds has been validated as well. On March 22, with the ten year at 2.32%, we projected a peak in the ten year yield in the neighborhood of 3%. The yield peaked on May 6 at 3.12%, and bonds have rallied since, with the ten year yield back down to 2.75% as of yesterday. The jury is very much still out, but at this point it appears the rally will be more durable than the one in stocks.
To sum up, the bond market bottomed on May 6 and the stock market bottomed on May 12. Two new versions of Synthetic Systems are currently being tested and should soon help us refine the outlook.