File this under “very interesting” – defensive markets Gold and Treasuries just reversed higher.
If this continues, we could see a bearish development for the US Stock Market (money flow).
Let’s take a look and see if the breakout holds:
For some perspective, see our featured post “How Other Markets Behaved while Stocks Surged.”
In it, you’ll see a broader look at the Money Flow across markets given the stock market’s recent surge.
Gold – and Treasuries – reversed higher on positive divergences in December and now hit a new phase in the reversal.
Gold broke above the $ 1,250 level this morning which is a key price pivot that confirms the bullish rally.
In fact, if Gold goes ahead to break above the 200 day SMA near $ 1,280, it would suggest a sustained rally through $ 1,300 and beyond.
That may not bode well for the non-stop uptrend in stocks.
We’re seeing a similar bullish breakout and reversal perspective on defensive US Treasuries:
The pattern is very similar with the collapse lower in November and eventual divergent reversal in December.
The Ten-Year US Treasury Note just broke above its resistance level at the 125 index level.
Once again, a sustained (valid) breakout here suggests price will continue through toward 127.
Unless these are just bull traps and false breakouts, it could suggest a turn in Money Flow from bullish/offensive to bearish/defensive.
Even if you’re just trading stocks, watch these markets to see what happens next.
Follow along with members of the Afraid to Trade Premium Membership for real-time updates and additional trade planning.
Corey Rosenbloom, CMT
Afraid to Trade.com
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