When stocks are in strong uptrends, they don’t just do well on an absolute basis, but they also tend to outperform their alternatives. We talk about that a lot around here.
Today’s chart has to show the Gold Fund breaking down to new all-time lows relative to the Nasdaq, as well as U.S. Treasury Bonds making new all-time relative lows as Interest Rates keep spiking.
Here is that chart showing the Nasdaq breaking out to new highs relative its alternatives:
Click on Chart to Zoom in
If you’ve felt that owning Gold or Bonds has been a better idea than buying Nasdaq stocks, this chart shows just how bad of an idea that was.
Even if you’re never going to trade bonds or gold, as a stock market participant, it’s important to follow these intermarket relationships.
Gold broke down relative to both stocks and the rest of the commodities space in Q4. Bonds broke down to new lows this week.
It’s quite obvious that there is an overwhelming amount of demand for stocks, while there seems to be an abundance of supply of both bonds and precious metals. Plenty to go around. Investors can’t sell them fast enough.
You’re seeing the result in the chart above.