The Bond Market Problem We Can’t Ignore

by Roger Scott | Aug 11, 2026

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Look, I know everyone’s caught up in the stock rally of the past week or so right now, but I need to talk about something that’s been bothering me.

The bond market hasn’t changed its structure. Not one bit.

Despite the recent strength in stocks, the bond market, represented by the long bond (TLT), remains locked in the same downtrend channel it has been building since this sell-off started.

If you think stocks can keep rallying while bonds look this weak, especially as we wrap up large-cap earnings season, you might want to reconsider.

We’re also dealing with a random market session, which isn’t surprising for this time of year. But that short-term unpredictability doesn’t erase the longer-term problem in bonds. It adds another layer of uncertainty to a market already sending conflicting signals.

TLT keeps hitting the upper end of its range and sagging right back down. We rally to resistance, fail and come back down. The question is whether we’ll finally break out or start heading toward the lower end of that channel again.

Multiple resistance levels must be cleared before we can talk about a meaningful reversal. Right now, we’re not even close to breaking the first one.

The Reality Check You Need to Hear

I’m going to be straight with you. If the bond market can’t get it together, we’re going to be in for some pain in the stock market. There’s no way around it.

We’ve got randomness and we’ve got divergence. What does that usually mean? It means the market lacks clear confirmation. Equities may look strong on the surface, but the bond market isn’t validating that strength.

Bonds reflect economic conditions, interest rate expectations and risk sentiment. That’s why their message matters to every investor, regardless of which stocks or sectors they trade. When you take a good look at the bond market right now, does it look bullish to you?

It doesn’t to me.

Meanwhile, volume is coming into equities, but we’re not getting the follow-through we need. And here’s the kicker — we’re overextended.

What the Structure Is Telling Us

The bond market is still building a clear downside channel. That’s not my opinion — that’s what the chart is showing us. Until that channel breaks, we have to respect the structure.

I wish the bond market had changed its character. I really do. But wishing doesn’t change reality. The technical picture remains bearish, and bonds are already sagging before reaching key resistance levels.

This divergence should make you pause before chasing stocks higher. When the foundation looks shaky, you’ve got to ask whether the structure built on top of it can really hold.

Trade smart, and don’t ignore what the bond market is screaming at us.

I hope that helps!

Roger Scott
Roger Scott Trading

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