Salient to Investors:

Tom Bowley at Invested Central/ writes:

Market technicals have slowly deteriorated with the highly influential banking industry reversing hard last week with a long-term negative divergence present on its weekly chart.

Longer-term momentum on the buy side is slowing. The latest rally in the S&P 500 actually saw banks underperform on a relative basis – a form of a negative divergence and a warning sign.

The bond market is much smarter than the stock market.  Historically, the 10-yr treasury yield and S&P 500 trend in the same direction, but temporarily not during QE, when they moved inversely to each other. Many times the 10 yr treasury yield changed direction before the S&P 500, as it did in early January.

Since 1950, stock market performance from February 1st through December 31st is highly correlated to January performance within the same year. Since 1950, half of the 24 lower Januarys saw a flat or lower market over the next 11 months and the average 11-month returns for negative January years was -0.16%. 

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