There are some important breakdowns taking place that I think are worth nothing. Two areas that I consistently look to for direction, Copper and US Treasury Bond Yields aren’t looking too hot these days. I don’t think it’s a secret as Copper has been selling off relentlessly since Super Bowl Sunday. But treasury yields are now vulnerable too, adding to the divergence between risk assets and US Stocks.
My pal Chris Kimble sent this to me Sunday night:
Here are the charts he sent along with his message. As you can see, both Copper and Treasury bond yields (30 & 10 yr) appear extremely vulnerable (click charts to embiggen):
And my answer to his question – What do I feel the message is? – I think it’s telling us to be careful. Very careful.
When it comes to US Stocks, I certainly have been over the past month. And US Stocks keep roaring higher telling me that I should have been leveraged long $SPY instead of picking and choosing where to be. And I’m okay with that. If my biggest mistake in the portfolio is erring on the side of caution, I’m okay with that. There are times to be crazy aggressive long (see here), and there are times to be extra careful. And right or wrong, I think this is one of those times.
So for now, we’ll stick with what we’re doing: selling any strength in Europe and most emerging markets, and picking and choosing where to be in the US. There are also other areas around the world doing well (like Indonesia) and areas acting poorly like Latin America. So sure, the message from bonds and Dr. Copper is to be extra careful. So we’re listening. And I think we all should.
*Make sure you’re following Chris Kimble on Stocktwits and Twitter @KimbleCharting – excellent technician. Been reading his stuff for a long time. Here’s a link to his blog: Kimble Charting Solutions.
Tags: $HG_F $JJC $ZB_F $TLT $TNX $IDX