U.S. Treasury Bonds have gotten absolutely destroyed, particularly on the shorter end of the curve. With interest rates exploding higher, money has been flowing beautifully out of the bond market. We're obviously happy to see that. It took a little longer to get going than we originally wanted it to, but we got there. So now the reevaluation process is upon us.

Today I want to talk about what we want to do here with respect to Bonds and Interest Rates and what some of our options might be. 

Long Precious Metals has been a big theme for us this year. I still think this is an area we need to be involved with and the weight-of-the-evidence is suggesting higher prices for the entire space.

Today I want to point out the recent breakout in Swiss Franc Futures. Historically there is a high positive correlation between this contract and the price of Gold. As we break out to new multi-year highs in Swissy, Gold looks likely to follow along:

If you've been following along, I try and go out of my way to discuss risk management techniques, tools and signals when the market gives them to us. Whenever I lay out a thesis, I like to talk about what the market should look like in the case that we are correct, while at the same time outlining what the environment would look like if we are wrong. The idea is to picture both scenarios and as the data comes in, try to identify which outcome we're in as quickly as possible.

The bond market is the biggest market in the world. Hello?

It's easy to get caught up in the daily noise about some crypto currency or a biotech stock. But these are tiny tiny tiny itsy bitsy little markets. The bond market is a real market, with actual money in it and driven by the largest financial institutions and governments all over the world. If you want real information, the bond market is where to get it.

My friend Larry McDonald, a former Lehman Brothers Bond Trader, was on a recent podcast episode of Technical Analysis Radio talking about exactly this. I encourage you to give it a listen, it's not long.

It's amazing how many people in this world completely ignore monthly charts. I never understood it. It's an exercise that only needs to be done once a month. It's not like eating healthy or working out that you have to do it consistently for it to work. This is 30 minutes per month! 30 minutes! 12 times a year. That's 6 hours of work that will be the most important and productive 6 hours of the entire year. Even if you have a short-term time horizon, all of these shorter-term trends come within the context of a much larger structural picture.

This weekend was our second annual Chart Summit. I still can't believe all the amazing feedback that continues to come in after this event. Thank you all from the bottom of my heart, both the presenters and the audience members. I didn't think we could make something even better than the original, but I think based on the responses, we may have actually pulled it off. Wow!

Our video production folks are hard at work putting all the videos together, but I've picked out the ones I did so I can share with all of you as soon as possible. The rest will be out this week.

One of the things that often gets underrated is the power of simplicity. What's wrong with only looking at price and focusing in only on what matters most? I get that you love your moving averages and candlesticks and all sorts of momentum indicators. But the most important indicator is still price. So that's what we're going to look at today using OHLC Bar Charts.

One thing that often gets forgotten is that we don't live in a vacuum. Life in the market is not just about absolute performance, but about how assets behave relative to their peers. The stock market isn't the biggest game in town, it's the bond market. But let's not forget about metals either. When stocks are in bull markets, they're not just going up as a group, they are also outperforming the alternatives.

Today we're taking a look at stocks, not just on their own, but relative to the other assets. We know that on their own stocks are making new all-time highs. This is happening all over the world. Stocks in the U.S. aren't up because of what's happening in New York or Washington DC. Stocks in the U.S. are up because stocks all over the world are going up, both in developed and emerging markets, despite of what is happening in New York and Washington DC.

The noise machines are getting louder these days with Junk Bond Funds falling to levels not seen since March. You have the frustrated stock market bears data mining the heck out of everything trying to find something to justify their losing positions, or lack of winning ones in many cases. Remember it's not just about the money they've lost trying to short the stock market, it's the overwhelming amount of opportunity cost already incurred by simply not being long enough. It's double the frustration. I've noticed these bears turning to the bond market for guidance.

While the yield curve continues to fall, we've actually found that historically the stock market does the best when the yield curve is exactly where it is today (2s-10s specifically). But today I want to talk about the spreads between Junk Bonds and Government Bonds. When the stock market is showing plenty of evidence of risk appetite, we want to see the bond market confirming that as well, not diverging from it.

They say not to kick someone when they're down. But in the market it's the opposite. When they are down is exactly when you want to kick them. This is especially the case when they are down while other things are up. We don't want to be shorting the strongest stocks. We want to be shorting the underperformers where the holders are losers, they're wrong, stuck and need to get out, but can't. We are here, not only to make money on the upside of things, but also to benefit from the losses of others. When this pain starts to really set in, that's when we want to kick them, when they're down!

In this case I have 3 examples of people who are down. This is in the face of stocks ripping: