Will Mr. Market present a new all-time high? Should we join the party? We maintain the TSX as the mo...
The Adens: Bonds, Stocks, and Metals
05/12/2014 9:00 am EST
The bond market is surging and it's been one of this year's top performers; this was further reinforced because the 10-year yield declined below 2.60%, hitting a six month low, observes Mary Anne and Pamela Aden, editors of The Aden Forecast.
At the same time, the 30-year yield is near a one year low. These are very bullish signs for bonds, indicating prices are headed higher as interest rates fall further.
As you can see on the chart below, bonds will likely continue to outperform. We, therefore, now recommend raising your bond position to 30% of your total portfolio (up from 15%).
You can buy individual over 10-year US bonds outright and/or buy ETFs. The ones we like best are ProShares Ultra 20+ Year Treasury (UBT), iShares Lehman 10-20 Year Treasury (TLH), and iShares Barclays 20+ Year Treasury Bond (TLT).
Meanwhile, the Dow Jones Industrials peeked into record high territory, while the Dow Transportations held near its all-time high.
This sounds bullish, and indeed it is, but there are still telltale signs suggesting we could see a traditional “sell in May and go away.”
The Nasdaq may be leading on the downside and it remains vulnerable below 4200. It would show clear weakness below 4000. The Utilities are strong above 535.
The gold price recently bounded from a key 2014 support near $1280. If it can now stay above $1300, it could be a start to a possible upcoming rise.
Keep an eye on the 65-week moving average now at $1360. A clear rise above this level means a good rise will be underway. The August 2013 high near $1420 will then be the next level to surpass. If silver can stay above $19, it’ll continue forming a possible springboard for the next upmove.
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