{"id":187493,"date":"2023-03-28T11:50:55","date_gmt":"2023-03-28T15:50:55","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=187493"},"modified":"2024-01-24T12:14:10","modified_gmt":"2024-01-24T17:14:10","slug":"chart-advisor-getting-a-read-on-yields","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/chart-advisor-getting-a-read-on-yields\/","title":{"rendered":"Chart Advisor: Getting a Read on Yields"},"content":{"rendered":"\n<p><strong><a href=\"https:\/\/www.investopedia.com\/contributors\/54841\/?utm_source=chart-advisor&amp;utm_campaign=fwd_chartadvisor&amp;utm_term=27774019&amp;utm_medium=email\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>By&nbsp;<\/strong><\/a><strong><a href=\"https:\/\/www.investopedia.com\/contributors\/54841\/?utm_source=chart-advisor&amp;utm_campaign=fwd_chartadvisor&amp;utm_term=27774019&amp;utm_medium=email\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>J.C. Parets<\/strong><\/a>&nbsp;&amp;&nbsp;<a href=\"https:\/\/get.allstarcharts.com\/?utm_source=chart-advisor&amp;utm_campaign=fwd_chartadvisor&amp;utm_term=27774019&amp;utm_medium=email\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>All Star Charts<\/strong><\/a><\/strong><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-monday-27th-march-2023\">Monday, 27th March, 2023<\/h2>\n\n\n\n<p><strong>1\/ Getting a Read on Yields<\/strong><\/p>\n\n\n\n<p><strong>2\/ Stocks Over Commodities?<\/strong><\/p>\n\n\n\n<p><strong>3\/ It\u2019s a Bull Market for Chocolate!<\/strong><\/p>\n\n\n\n<p><strong>4\/ Bitcoin Reaches a Key Level<\/strong><\/p>\n\n\n\n<p><em>Investopedia is partnering with All Star Charts on this newsletter, which both sells its research to investors, and may trade or hold positions in securities mentioned herein. The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-1-getting-a-read-on-yields\">1\/ <strong>Getting a Read on Yields<\/strong><\/h2>\n\n\n\n<p>Two relationships that have proven very helpful in offering insight on the bond market are the copper vs. gold ratio and regional banks vs. <a href=\"https:\/\/www.investopedia.com\/terms\/r\/reit.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=8692991-20230327&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=032723\" target=\"_blank\" rel=\"noreferrer noopener\">REIT<\/a>s ratio. Here they are, overlaid with the 10-Year U.S. Treasury yield:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/03\/1-20-1100x608.png\" alt=\"\" class=\"wp-image-187507 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/608;\" \/><figcaption class=\"wp-element-caption\"><strong>Source: All Star Charts, with data provided by Koyfin<\/strong><\/figcaption><\/figure>\n\n\n\n<p>These ratios have historically had a significant <a href=\"https:\/\/www.investopedia.com\/terms\/p\/positive-correlation.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=8692991-20230327&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=032723\" target=\"_blank\" rel=\"noreferrer noopener\">positive correlation<\/a> with yields themselves. Due to its <a href=\"https:\/\/www.investopedia.com\/terms\/p\/procyclical.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=8692991-20230327&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=032723\" target=\"_blank\" rel=\"noreferrer noopener\">pro-cyclical<\/a> nature, copper tends to outperform gold during rising interest rate environments. Similarly, banks, due to the economics of their lending operations, tend to outperform their equity alternatives when yields are moving higher.<\/p>\n\n\n\n<p>However, as illustrated by the topping formations in these ratios, their correlation with yields has dislocated in recent years. With Treasury yields looking vulnerable at key <a href=\"https:\/\/www.investopedia.com\/terms\/z\/zone-of-support.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=8692991-20230327&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=032723\" target=\"_blank\" rel=\"noreferrer noopener\">support levels<\/a>, the odds of yields catching lower in the near future to confirm the <a href=\"https:\/\/www.investopedia.com\/terms\/b\/breakdown.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=8692991-20230327&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=032723\" target=\"_blank\" rel=\"noreferrer noopener\">breakdown<\/a> in these two ratios could be high.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-2-stocks-over-commodities\">2\/ <strong>Stocks Over Commodities?<\/strong><\/h2>\n\n\n\n<p>Commodities have been the best-performing <a href=\"https:\/\/www.investopedia.com\/terms\/a\/assetclasses.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=8692991-20230327&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=032723\" target=\"_blank\" rel=\"noreferrer noopener\">asset class<\/a> over the past two years.<\/p>\n\n\n\n<p>However, when we compare them to stocks, the evidence suggests a trend <a href=\"https:\/\/www.investopedia.com\/terms\/r\/reversal.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=8692991-20230327&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=032723\" target=\"_blank\" rel=\"noreferrer noopener\">reversal<\/a> could be underway. <\/p>\n\n\n\n<p>The chart below shows the S&amp;P 500 (<a href=\"https:\/\/www.tradingview.com\/chart\/?symbol=SP:SPX&amp;hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=8692991-20230327&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=032723\" target=\"_blank\" rel=\"noreferrer noopener\">SPX<\/a>) vs. CRB <a href=\"https:\/\/www.investopedia.com\/terms\/c\/commodityindices.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=8692991-20230327&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=032723\" target=\"_blank\" rel=\"noreferrer noopener\">Commodity Index<\/a> (CRB) ratio carving out a bottoming formation over the past year:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/03\/2-21-1100x546.png\" alt=\"\" class=\"wp-image-187508 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/546;\" \/><figcaption class=\"wp-element-caption\"><strong>Source: All Star Charts, with data provided by Optuma<\/strong><\/figcaption><\/figure>\n\n\n\n<p>With price pressing against the upper bounds of the range with a 200-day <a href=\"https:\/\/www.investopedia.com\/terms\/m\/movingaverage.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=8692991-20230327&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=032723\" target=\"_blank\" rel=\"noreferrer noopener\">moving average (MA)<\/a> that has flattened and turned higher, stocks could resolve higher against commodities and begin outperforming over longer timeframes.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-3-it-s-a-bull-market-for-chocolate\">3\/ <strong>It\u2019s a Bull Market for Chocolate!<\/strong><\/h2>\n\n\n\n<p>With the market assuming a more defensive posture amid the volatility of recent weeks, we\u2019re noticing more <a href=\"https:\/\/www.investopedia.com\/terms\/c\/consumerstaples.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=8692991-20230327&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=032723\" target=\"_blank\" rel=\"noreferrer noopener\">consumer staples<\/a> stocks on the list of new highs.<\/p>\n\n\n\n<p>Shares of The Hershey Company (<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=HSY&amp;hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=8692991-20230327&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=032723\" target=\"_blank\" rel=\"noreferrer noopener\">HSY<\/a>) are charted below, along with their relative trend against the S&amp;P 500:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/03\/3-23-1100x546.png\" alt=\"\" class=\"wp-image-187509 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/546;\" \/><figcaption class=\"wp-element-caption\"><strong>Source: All Star Charts, with data provided by Optuma<\/strong><\/figcaption><\/figure>\n\n\n\n<p>If a stock is making new highs, or breaking out of a bullish pattern on absolute terms, we should also examine whether it is making new highs relative to its peer group. In this case, it&#8217;s the broader market.<\/p>\n\n\n\n<p> As such, we\u2019re looking for HSY to break out of this multi-month base versus the S&amp;P 500 as confirmation of its new highs on an absolute basis.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-4-bitcoin-reaches-a-key-level\">4\/ <strong>Bitcoin Reaches a Key Level<\/strong><\/h2>\n\n\n\n<p>When it comes to cryptocurrencies, Bitcoin has remained resilient after completing a short-term reversal pattern two weeks ago.<\/p>\n\n\n\n<p>After successfully defending the prior-cycle highs from 2017, Bitcoin resolved higher from a base and rallied to the next line of <a href=\"https:\/\/www.investopedia.com\/terms\/r\/resistance.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=8692991-20230327&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=032723\" target=\"_blank\" rel=\"noreferrer noopener\">resistance<\/a> between $28,000 and $30,000.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/03\/4-22-1100x546.png\" alt=\"\" class=\"wp-image-187510 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/546;\" \/><figcaption class=\"wp-element-caption\"><strong>Source: All Star Charts, with data provided by Optuma<\/strong><\/figcaption><\/figure>\n\n\n\n<p>This level represents where Bitcoin and other cryptocurrencies found support and rebounded during the last <a href=\"https:\/\/www.investopedia.com\/terms\/b\/bullmarket.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=8692991-20230327&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=032723\" target=\"_blank\" rel=\"noreferrer noopener\">bull market<\/a> in 2021.<\/p>\n\n\n\n<p>With so much price memory at this level, former support could turn into resistance. A <a href=\"https:\/\/www.investopedia.com\/terms\/c\/consolidation.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=8692991-20230327&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=032723\" target=\"_blank\" rel=\"noreferrer noopener\">consolidation<\/a> below this area would make sense. <\/p>\n\n\n\n<p>If and when buyers absorb the overhead supply at this zone, we could anticipate a new leg higher. Until then, we could see some corrective price action from Bitcoin and other cryptocurrencies.<\/p>\n\n\n\n<p>&#8212;<\/p>\n\n\n\n<p>Originally posted 27th March, 2023<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Two relationships that have proven very helpful in offering insight on the bond market are the copper vs. gold ratio and regional banks vs. REITs ratio.<\/p>\n","protected":false},"author":186,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21,14,15,18,6,8,9,22,23,26,3],"tags":[8083,4345,6432,207],"contributors-categories":[13686],"class_list":{"0":"post-187493","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-commodities","7":"category-etfs","8":"category-fixed-income","9":"category-macro","10":"category-north-america","11":"category-region","12":"category-securities","13":"category-stocks","14":"category-technical-analysis","15":"category-text-articles","16":"category-traders-insight","17":"tag-btcusd","18":"tag-crb-index","19":"tag-hsy","20":"tag-spx","21":"contributors-categories-investopedia"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO 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