Has anyone else been perplexed by this the past few days? Yesterday it struck me that bonds should have been on fire when the Dow was down 470 pts and they were barely keeping their head above water.  It compelled me to pull together a chart this evening to see if we have something going on trendwise.  Up until Aug 24th we had pretty normal action where money was going into the TLT while stocks were trending down….and vice versa prior.  When Monday came around both the S&P began trading quite similar as if everything HAD to get sold when equity prices fell.  That strikes me as a potential liquidity crisis.  I’m wondering if the price of oil is getting jacked around by people trying to raise prices to sell into to meet margin calls.  I had read earlier this summer that margin levels were at all-time highs.  The markets can be quite fragile when excessive margin is being applied.  I can only imagine how much the downturn in the China market has hurt worldwide (including US) investment, straining margin accounts and the like.  It just feels like people are scrambling for liquidity and that’s why we are seeing the rallies get sold into hard right at all the obvious levels….i.e. close to getting out even.  I’m hearing no one in the media talk about this and I’m admittedly no expert in this area but it’s the only answer I can come up with when I see charts like this:

TLT SPX