We enjoyed a 2nd straight day firmly above the old highs of 1370 which helps confirm this breakout. The softening of the bond market may help provide the catalyst for the next leg higher.
How’s that?
We are likely near the end of a 30 year bond rally. Meaning rates have been going lower for 30 years making the bond market a safe and profitable haven for investors.
So now with rates bouncing up from historic lows, then bond investors will start losing money for the first time in a LONG TIME. When they look over their shoulder and see stocks making new highs, then naturally bond funds will see outflows and stock funds will see inflows. This fresh money coming into the stock market will help push it up to higher highs.
Best,
Steve Reitmeister (aka Reity… pronounced “Righty”)
Executive VP, Zacks Investment Research
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