by Bespoke Investment Group
The chart below shows the relative strength of stocks versus long-term US Treasuries over the last year. When the line is rising, it indicates that stocks are outperfoming Treasuries and vice versa. While equities have outperformed Treasuries over the last year, the peak point of relative strength actually came back in early February. Since then the relative strength chart has been making a series of lower highs and is showing signs of rolling over. It is often said that the equity market tends to discount events six months out into the future, and if that is the case, then the equity market began to start pricing in the end of QE2 (end of June) right on schedule.
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