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<\/p>\nThe bond market is getting nervous. And that nervousness should eventually spill over into the stock market.<\/p>\n
Let me explain\u2026<\/p>\n
Long-term U.S. Treasury bond prices fell more than 1% last week. They\u2019ve fallen 4% since early December. That\u2019s quite an ugly move for a government-guaranteed bond.<\/p>\n
As a result, interest rates \u2013 which rise as bond prices fall \u2013 have spiked higher. For example, the yield on the 10-year Treasury note hit 2.64% on Friday. That\u2019s 30 basis points higher than where it was one month ago. It\u2019s almost 60 points higher than where it was in September.<\/p>\n
That\u2019s the sort of move that often occurs a few months ahead of an important stock market peak.<\/p>\n
Think about this\u2026<\/p>\n
Back in January 1999, the 10-year yield was just 4.5%. One year later, it was 6.75% \u2013 a spike of 50%. The dot-com bubble popped two months later.<\/p>\n
In 2007, rates bottomed in March at 4.5%. By July, they had risen to 5.5% \u2013 a 22% increase in just four months. The stock market peaked that September.<\/p>\n
Here’s how the 10-year Treasury note yield looks today\u2026<\/p>\n
<\/p>\n
The 10-year yield bottomed near 2% last September. Today, it\u2019s near 2.64%. That’s a 32% increase in less than four months.<\/p>\n
The interest rate signal is flashing bright yellow\u2026<\/p>\n
Now, it\u2019s not a sign to sell everything and head for the bunker. It\u2019s not a signal telling us to get aggressively short the stock market. The price momentum is far too bullish to do that.<\/p>\n
This interest rate signal is just a friendly reminder to be a little bit careful. Maybe start looking for ways to protect your portfolio \u2013 like raising stops on long positions, or buying some protective puts.<\/p>\n
It\u2019s like Grandma reminding us to put on sunscreen as we head out to the beach. Go ahead and have fun in the sun. Maybe there\u2019s nothing to worry about after all.<\/p>\n
But, with a little protection, you can avoid getting burned.<\/p>\n
Best regards and good trading,<\/p>\n
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<\/div>\nJeff Clark<\/p>\n
Market Minute<\/em> readers got a kick out of Friday\u2019s issue, \u201cThe Problem With a Hot Market\u201d<\/a>\u2026<\/p>\n \u201cI tried to find an artificial intelligence company that uses blockchain technology to fund marijuana farms\u2026\u201d<\/p>\n Thanks for that one. Nice to start my day with a laugh.<\/p>\n \u2013 Will C.<\/strong><\/p>\n<\/blockquote>\n <\/p>\n I got a good chuckle from this morning’s Market Minute<\/em> mailbag comments. Especially when you wrote, “I tried to find an artificial intelligence company that uses blockchain technology to fund marijuana farms\u2026”<\/p>\n That should fit Rene’s desire for a \u201cgood hot stock\u201d to trade. Thanks again for the good-humored remarks. It makes the day a little brighter.<\/p>\n \u2013 Douglas H.<\/strong><\/p>\n<\/blockquote>\n <\/p>\n Good morning Jeff! I have been a subscriber for less than one year and I follow your advice whenever I can. However, I also make decisions on my own but I can say I do better following your advice.<\/p>\n Regarding all those who disagree with what you may be suggesting or \u201cnot recommending,\u201d I don\u2019t remember anything in subscribing to your service that says we can\u2019t make decisions or trades on our own! The only thing they can\u2019t do is blame you if they don\u2019t work out. This I know from experience.<\/p>\n Keep up your good work and recommendations!<\/p>\n \u2013 Ray D.<\/strong><\/p>\n<\/blockquote>\n <\/p>\n And some more thoughtful words about the Delta Report <\/em>and the markets\u2026<\/p>\n I’m relatively new to your service but I bought lifetime, and I have to say that I really appreciate what you’re doing.<\/p>\n I don’t know much about markets, and I’m learning a lot listening to your thoughts and your near-constant updates. The wins are great, too. Please keep doing what you’re doing.<\/p>\n And watch out for the wildfires. I’m a newly minted crypto millionaire, and I’m pulling a good chunk of the earnings out to the traditional market.<\/p>\n \u2013 Vishal P.<\/strong><\/p>\n<\/blockquote>\n <\/p>\n I am in full agreement\u2026 Market seems totally unsustainable at this level\u2026 esp. since Jan. I am essentially closing out many long-term longs\u2026or buying underlying puts to hedge. This guy Clark is very bright. He has experience, and it shows.<\/p>\n