posted on 26 November 2016
by Staff Reports Money Morning, Money Morning
-- this post authored by D.R. Barton Jr.
When I was growing up, a trillion dollars was a lot of money. Maybe that's why I think the full-on rout in the bond market, which has shed as much money since the election, is historically significant.
Bonds are caught in nothing less than a textbook "perfect storm," which I think heralds the bitter end of a secular, decades-long bull market.
That's critical for bonds and bondholders, of course, but it's important for the stock market, as well.
Let's take a look at this chart and I'll show you why…
Bonds Couldn't Resist These Forces
The macro "ingredients" for the rout I mentioned are…
What these three factors add up to is a global bond meltdown.
I believe we are entering a period during which bond prices could go down for years - and maybe longer.
My Stealth Profits Trader readers just took in a quick 30% on our ProShares UltraShort Lehman 20+ Year ETF (NYSE Arca: TBT) trade. I don't see that trade turning unprofitable anytime soon, even if we do see some bond price pops in the near future.
Stocks, of course, are a different story…
Shares Should See Upside for the Foreseeable Future
Stocks continue to hold the ground they gained in the post-election "Trump Bump," and then some.
The Dow Jones Industrial Average made another new all-time high on Monday and has since entered a classic consolidation pattern that is easy to see on the chart:
The Russell 2000 small-cap index is now the strongest of the four major indexes, as it has made three all-time highs this week. The S&P 500 and the tech-heavy Nasdaq have also played "catch-up" this week.
Taken together, this collective price movement indicates that the bullish pattern we see on the Dow chart above should resolve by breaking to the upside. This is also consistent with the seasonal trends that show equities are usually strong into year-end.
I don't see much happening to change that, so I'm going to trade accordingly.
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