Weighing in on the Whiplash Zone…

Going back to our previous post on January 15th, on long-term interest rates, the manipulation appears to be settling in to place. Yesterday’s sharp bump up on long-term interest rates sets this up. Our Climate Tech Model indicator has now been set into contrarian mode. What that means is the 20 YR leveraged long Bond price ETF, TMF is now in the allocation mix as the move above 4.892 % on the 30 YR yesterday, and now is trading below that level. This is viewed as the first signal and a key factor towards a deflationary trend that will play out during the coming year as the stock blow-off and crash commences.

Interestingly and a true contrarian setup, is the fact that our “Animal Spirits” indicator is under severe pressure. Nothing could be better for a move into the blow-off as the wild money is scared.

No doubt the fact that the yield curve will stop steepening will mean stocks will require some hedge positioning for a while.