The Bond Market Is Telling Us To Buy Stocks Now

The signs are everywhere if you just know where to look, and the bond market is sending us a big tell.

If you follow my work at all, then you know I always say “watch the bond market” for tells as to where stocks may be going. People invariably look to the stock market itself for signs as to where it may be going, and this also invariably leads to often very wrong signals.

As a trader you need to watch the movement of cash throughout these markets, and it looks to me that an exodus of cash from the bond market is about to occur and where will it go? Into stocks.

Despite this stock market being ridiculously overvalued by historical norms, in the short run this market is going higher based upon central bank management/support.

Have a look at the chart below, ticker (NYSEARCA:BND).

It looks to me that this trade (above) is getting old, and if this plays out as I believe we are going to see cash move into stocks and soon.

We will also likely see cash move out of other “safe” assets and into risk as well, (see my last two articles).

As individuals who are seeking to capitalize on all this well, I hope that I am making this simple.

Bonds May Be Telling Of A Major Stock Market Rally

The global economic situation is grave, but that will not stop the US stock market from a major move higher.

The situation is critical, and the world central banks have gotten so desperate to keep the global economy afloat that not only are they continuing to slash rates, they are going negative.

Quite simply the world central banks are not allowing natural market cycles to play out, and are instead continuing to hyper-stimulate a global economy on life support. With this now central bank managed market, we can expect the world to continue to be flooded with debt in the form of printed out of thin air currencies which will be then used to buy IOU’s (bonds) in an effort to push off the unavoidable cataclysmic meltdown of the world financial system.

Understand all this MUST BALANCE OUT at one point, and in my professional opinion we are dangerously close.

Understanding that the world central banks including the Federal Reserve, (who is already performing a backdoor QE program which never ended), are going to engage in money printing and debt creation unlike anything seen yet, allows us to understand that this market is poised to move higher.

Have a look at the chart below of ticker (NYSEARCA:BND), Vanguard Total Bond Fund.

It appears to be on the cusp of a major sell-off with regard to bonds, and just like the time before this market could make a big move higher.

What’s your take?