TBONDS PROVIDE PROTECTION FROM COLLAPSING DJIA

Back on September 2 I wrote (http://investrac.com/blog/dow-30-at-the-long-term-apex) that the DJIA had either peaked in August or would do so in September and would fall until November 2016, and for the record the high came on September 19 at 17351...so InvesTRAC is long term bearish. Then on October 3 I showed a bullish chart of the 10 year Treasury yield with InvesTRAC's forecast for declining interest rates until January 2016 (http://investrac.com/blog/bull-market-in-bonds)...so InvesTRAC is long term bullish on TBonds. If this is to be then the DJIA/TBOND ratio should give evidence that it is going to decline. And indeed it has. Take a look at the weekly chart of the DJIA/TBOND ratio plotted weekly showing the July 13 2007 high at 130.0 followed by a decline of 60 percent to 51.5 on March 6, 2009. During this time the Dow dropped from 13907 to 6627 (-52%) and TBonds rose from 106.97 to 128.56 (+20%). After the low at 51.5 the ratio rose to 128.45 almost reaching the 2007 high at 130 ...it failed to get above the previous top and then violated its uptrend and now it is breaking down through support. InvesTRAC's forecasting model shows that the decline in the ratio could last until October 2015 before there is a meaningful correction. If history is going to be repeated then best strategy is to be long TBONDS short equities in equal values.

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