Is The Music Stopping?

Bond yields are rising (prices are falling) as market participants re-adjust their views on future inflation and build in the end of global quantitative easing (otherwise known as "Tapering").

(click on the chart to enlarge)

We all may remember the lead-up to the US Federal Reserve's "Tapering" of  QE 3.

The expected "Tapering" was significantly more influential on markets that was the actual "Tapering".

However, bond markets can and do lead all other markets and we have to take heed to what they are telling us, for now.

As is usually the case, most investors/traders focus on the stock markets and as usual, they can be late to the party:

While bond markets were signalling a trend change, equity markets were trying to make new highs, but with lighter volume and little follow-through (and rather expensive prices which Fed Chairwoman Janet Yellen suggested yesterday, this blog has been suggesting this for some time) they are now looking for buying support (and selling volume is rising):

• Technically buying support should come at the 200 day moving average at approx. 2030 (for the S&P 500).
• Failure to find support at that level will give way to a test of the 1970 level.
• Below that, the October lows of 1820.

What is important now is patience.

It is not necessary to always be fully invested.

Better Values give way to opportunity.

Cash is an asset and a defensive one.
Grab your chair!

www.highrockcapital.ca