Last Thursday I alerted you to one of the most important indicators I follow – the stocks/bond ratio.
The ratio had just turned negative, a bad omen for stocks as bonds began to emerge as the stronger asset class.
I also warned that the signal could be a short-term “whipsaw.” And whipsaw it was!
Take a look…
Last week, this indicator turned red showing investors’ preference for bonds over stocks. Then, following Friday’s strong stock performance, the indicator flipped to green again.
Not only is the indicator now green, indicating the relative strength of equities over fixed-income, it’s on the verge of making a higher high – a strong signal of strength for stocks.
I’ll continue to keep a close eye on this important indicator, but for now it’s giving the “all clear” signal for stock market investors.
With Harry and I in agreement that the top is not here just yet, we continue to point subscribers to the Boom & Bust portfolio for the our best recommendations. If you’re not yet a subscriber, join us.