The sharp rally from last week feels like a final “gasp” in a bull market move. Stocks are now right at the tip of a bearish rising wedge pattern.
It would be easy to look at that move chart and believe that this is the start of the next major leg up. The only problem is that the “smart” money in the bond market is not buying this move even for a second.
The long-Treasury Bond ETF (TLT) has erupted higher, breaking out of a six-month consolidation range. This is a major development for perhaps the single most important asset class.
One of these asset classes is wrong. And it’s likely not bonds. The yield curve has undone the entire election rally. It is now moving towards the BREXIT lows.
This is a major warning that the system is in fact in “risk off” mode. Stocks are in complete “la la” land… But likely not for much longer. When this pattern finally breaks down, we’re likely going to erase all of the last six months’ gains in a matter of days.
A Crash is coming… and it’s going to horrific.
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Best Regards
Graham Summers
Chief Market Strategist
Phoenix Capital Research