This distortion between risk and return has created a bubble effect in all global equity classes. Momentum oscillators are now extremely overbought and are very clearly trending bearish.
Today, there is another Federal Open Markets Committee (FOMC) meeting. The news of the monetary policy decided upon will be released on Wednesday, June 16. Expect choppier prices going into the meeting and shortly thereafter.
The Only Chart You Need to Read!
The U.S. markets failed to break out:
Daily Chart Of Bonds
The bond rally set a record high in the rush to a new safe haven. We are now experiencing a global rally in government bonds, which broke out last Friday, June 10, while equities declined.
Daily Chart Of Gold
Nothing will stop this new bull market in gold and silver. Now there is a stampede into this much talked about asset class. Just take a look at the chart of gold below.
In short, the major trends of all asset classes, which have been in place for several years, are coming to an end. The majority of investors have no idea what is starting to take place and will do what the masses do every time a new bear market takes place. They will hold their positions, watch the value of their nest egg get cut 30%-to-60% in size, and then give up and exit equities near the bear market lows six-to-18 months from now. It is unfortunate, but technically we need the masses to do what they always in order for things to unfold in a controlled fashion. In a recent post, I showed where the financial markets and sectors are within this major economic cycle.
There are some new trades I will be taking very soon with my money and subscribers. If you want to be in tune with the markets and profit during chaos, then you should think about joining my morning daily video newsletter and ETF trade alerts service: www.TheGoldAndOilGuy.com
This article is commentary by an independent contributor.
Chris Vermeulen is full-time trader and research analyst for TheGoldAndOilGuy Newsletter.