Karpel’s Corner: Hot Commodities Good for Stocks, Bad for Bonds

Welcome to Karpel’s Corner. This is where I throw out my thoughts on the markets and share some of my favorite strategies. I keep it market-focused, and never miss an opportunity to teach trading strategies and commentate on the latest trends affecting the financial markets. Hope you enjoy today’s post!

The weak Buck ($UUP) has been the catalyst so far in first half of the year for a hot Commodity Market ($CRB) ~+10 percent. We also see that the commodities have been a solid catalyst for Stocks ($SPY) ~+6 percent.

Bonds ($TLT) are lagging. When I look back in time to other periods when the stocks were moving at a rate much higher than bonds, market tops were signaled. We saw this is 2000 and 2007. But in 2013, stocks really broke — and broke out to highs that we have not seen since 2007.

While there could be some volatility, new highs in stocks and bonds are continuing to fall out of favor. And as I pointed out, the run in commodities could be the real catalyst for new highs in Stocks. This also spells troubles for long bonds.

Keeping the trad tight going in to the holiday week, but keep these segments on your radar.

See you next time at Karpel’s Corner!