New Yield Curve Inversion Is Helping These Stocks Go Up For Real - Mike Swanson
If you have been paying attention to the financial news lately then you know that the yield curve inversion with US Treasury bonds is now making headlines everywhere . This development has been slowly been happening as bonds have been making moves for months, but the inversion has generated an attention tipping point.
There have been some big moves in a few specific sectors that people believe will benefit a coming reduction in interest rates. We can expect the gains to continue in these few stocks.
Let me show you what I mean.
New Yield Curve Inversion Is Helping These Stocks Go Up For Real
The inversion in the bond market that everyone is paying attention to is the 3-month and 10-year Treasury bond. Inversion happens when short-term rates go higher than long-term rates. It means that people in the bond market believe in the future long-term rates will go down so they are selling them to throw money into short-term bonds while they can get higher yields before the go away.
The 3/10 is an indicator historically forecasts a recession 12-18 months in the future when it starts.
However, many stock market commentators say do not worry about this, because if you sell your stocks you could miss out on further gains. They point out that when this happened in 2006 that the stock market went up for another year.
This chart highlights the previous times the 3/10 yield curve inverted.
The reality is that this inversion can also happen at times that create very sluggish stock market action and true topping action in a market so I think just being complacent about the inversion isn't the thing to do - and there will come a time in the future where another stock market decline will happen.
We are in fact seeing some past popular winning stocks now turn into big market laggards, such as Facebook and NVDA.
The inversion is telling us that we are at the end of an economic expansion cycle and can now see a cycle of Federal Reserve interest rates on the distant horizon.
There are sectors that go up and benefit at this moment in the cycle that are the best to focus on for stocks picks and buying.
High dividend paying stocks are starting to go, such as REIT's, utilities, and ones that benefit from more money printing such as mining stocks.
I did a video last week going over five top stocks.
Gold stocks are really starting to move now with many juniors getting bids.
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Now of course there are some stocks that are getting hit now too as some stocks have simply blown up with sudden drops as part of this process.
Right now there are five widely owned stocks I believe are in big trouble. To get my free report on these stocks click here.
WallStreetWindow.com is founded by Michael Swanson, a former hedge fund manager who has been trading the market since the 1990's. He is the author of the book Strategic Stock Trading and also has a Masters Degree in History from the University of Virginia. Subscribe to his free email list to get his future stock market and trading updates.
