I mentioned a possible new bond paradigm and today's action helps build my case. TLT hit 130.61 early today, outpacing the previous June 1 high of 130.38. And, as suspected TBT has fallen off it's previous support ledge to a new all time low of 14.46. What's important here (I think) is the position of the VIX relative to bonds (shown above on daily bars). In previous TLT surges the VIX has been pretty much in sync but since mid-June the two have diverged. Clearly there's a developing change in the relationship between bonds and volatility that bears closer attention (and explanation). Where's Bill Luby when we need him? In the meantime bonds are the place to be and our bond-centric Mosaic model continues to outperform SPY.
by Jeff Pietsch