Index leads bonds or bonds leads index?

Does anyone have information about which one leads which one?

 

Which index? Spoos? In my experience, these two can take turns leading. If stocks are in the spotlight (like now), they lead. If bonds have interest rate news, etc., then they can lead.

Jay

 

Good observation! I also got a feeling that they can change roles. In John Murphy's Intermarket Analysis he said the bonds lead the Index. But I am not sure it is correct. He also said bonds and index usually move in the same direction. This one I am sure is incorrect.

 

Well, they are extremely correlated, but in divergent directions.

Jay

 

Jay,
When you trade the SP or NQ, would you also look at the charts of bonds and only put on trades when they start to diverge?

 

No, I no longer look at bonds for trading ES except during big report releases or when interest rate changes are really in the news. Many traders look at bonds all day, but they just don't seem to help me. In fact, bond data is often a hinderence as a bond move may lead me to ignore my trade signals. I do, however, glance at bonds throughout the day to see how they are doing technically overall on the day.

Jay