Support Needs To Hold For Bulls
The chart below shows the performance of technology (QQQ) relative to bonds (TLT). When the ratio rises, tech stocks are in favor. When the ratio falls, bonds or risk-off is in favor. In early May 2012, trendline A was violated in a bearish manner; the S&P subsequently shed an additional 100 points (see bottom of chart). In the present day, support is still holding below point S on the right side of the chart. Another break of trendline A would increase the odds of further corrective activity in risk assets. Conversely, if the trendline holds, it would be a good sign for stocks, precious metals, and commodities.