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Bond and S&P500 (2020 U.S Presidential Election Special)

The economic backdrop today is the 2020 U.S presidential elections during the Covid-19 pandemic. People question: “The market must be too expensive, it should come down!” then there are the Dip-buyers who says: “Just buy the dips it never fails!” So which is it?

The 20 year chart dates back to 2001. The Red line is the price of U.S Treasury bonds and the Blue line is the price of the S&P500.

From the chart you can see that the price of T-bond is moving within a price channel. The yellow boxes indicates T-bond price bottoms and consolidations after a price rally. The white boxes indicates T-bond price tops.

  • Whenever T-bond prices moves up from the yellow box, the price of S&P500 falls.
  • Whenever T-bond prices moves down from the white box, the price of S&P500 rallies.
  • The 2 blue vertical lines indicates the 2008 and 2020 tops of the market crash. Both happened when T-bond prices are moving up the price channel.

Today, the price of T-bond stands at the top of the price channel and looks set to drop. With a few more hours or days to the results of the 2020 U.S presidential election, I would vote for the Dip-Buyers.

Edwin Wong
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