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The chart below reflects its been a tough year for Government Bond ETF TLT, as its down 11%, while the S&P 500 is up 19%, almost a 30% spread.

If an investors portfolio was invested 60% in the S&P 500 and 40% in Government Bonds, at the beginning of year, 2013’s total return at this time is a little less than a 7% gain, due to the weakness in bonds.

From a buy and hold portfolio construction stand point, if an investor owned Commodities and Real Estate (IYR) the total return would even be lower, due to these two have had poor years as well!

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The top chart reflects that TLT’s decline has it facing an important support line. At the same time sentiment has changed a good deal in less than 120 days, as bullish sentiment on bonds has declined from 65% bulls, to just 26% bulls.

Joe Friday says….Bonds are due a relief rally, due to support at hand and few bond bulls. If these two conditions don’t create a relief rally in Government bonds, the message would be….serious troubles in Bond land!!!

 

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