Is This January 2009 or May 2009?

April 27, 2020

Did you notice how Stocks, Bonds and Gold are all at or near 34-day highs?

Can all 3 continue higher? Yes.

Is that the bet that we want to make, for none of them to roll over? No. That is not the bet we're making.

I think at least one of these rolls over before the strongest continue. The bigger question for us is, which one is it going to be?

Could it be like this? Have these ratios already peaked, and will continue to decline, meaning stocks are the new leaders?

Or, did this bounce in stocks just allow for these relationships to digest their massive moves throughout February and March? Meaning that Gold and Bonds go on to outperform again from here?

Why does this matter so much JC? Why are you so focused on bonds and gold when we're talking about stocks here?

Well, for those of you following along for while, you know this is where the conversation starts. This is an intermarket world, and more so with each day that passes. Besides, it was the bond market that played such a huge role in getting everyone out of stocks at the end of January.

Don't we want to dance with the girl who brought us? Isn't that the right thing to do? It's only fair.

Meanwhile, we only have a few days left of the "Best 6 Months" of the year. Remember, every single penny made in the Dow Jones Industrial Average since 1950 came between November - April. In other words, if hypothetically you bought the Dow on May 1st every year since 1950 and sold on Halloween, you would actually have a negative return.

So the way we like to treat these seasonal trends is to see if the market respected or ignored seasonal tendencies. In this case, remember, stocks are supposed to have their best periods. When they don't is the signal that something is wrong.

Here are the returns so far:

I'll leave you with this as we start the week. Have we seen the move in bonds? Or have we just been digesting near all-time highs the past couple months getting ready for the next leg higher?