Is the Next Leg Up Getting Under Way?

The markets bounced yesterday as we suggested.

Remember, the Fed has spent TRILLIONS of dollars reflating the credit markets. So, with those same credit markets breaking down yesterday, the odds were high that the Fed would step in.

Sure enough Junk Bonds rallied hard. This reversal looks a lot like the one that occurred in June before the next major leg up for stocks (red circles in chart below). High yield bonds (HYG) broke support (blue line in the chart below) before suddenly reversing and rallying hard.

Chart: High Yield Bonds

We need to see some follow through, but this is a good start.

It’s a similar story for stocks. The S&P 500 held support (red line in chart below). However, we need to see an upwards breakout of the falling bullish wedge formation (blue lines in the chart below) for the “all clear” signal to be in place.

Chart: S&P500

Bottomline: things have improved dramatically, but we’re not out of the woods yet. If we get some follow through today and Monday, the next major rally could finally be here.

Best Regards,

Graham Summers
Editor, Money & Crisis

You May Also Be Interested In:

Graham Summers

Editor Graham Summers has spent the last 15 years building a reputation as one of the most sought after and highly respected investment strategists on the planet. His work has been read and quoted by former Presidential advisors, award-winning institutional analysts, U.S. Senators, and more. He’s one of the few analysts on the planet to...

View More By Graham Summers