Bad bonds
Earlier, Dean noted that a spike in a prices paid indicator has tended to precede a rise in note yields (decline in price). Treasuries have sold off hard lately, especially on the longer end of the curve.
Continuous 30-year Treasury bond futures have now dropped more than 8% below the 100-day average, one of the most oversold readings since the contract's inception.
"Oversold" doesn't always mean "buy" and this seemed to be the case here. When the contract first fell more than 8% below its 100-day average, it tended to lose even more ground over the next 2 months. This is somewhat surprising given the long-term bull market in bonds. Usually, oversold in an uptrend gives more consistently positive forward returns.
For what it's worth - and it's always dangerous to extrapolate a signal in one market to another - forward returns in the S&P 500 after these bond signals were excellent, with gains every time over the next 3 months.