Markets are on the verge of breaking out of their respective holding patterns. The breakout is likely to be rather dramatic with many of the charts below (representing the major asset classes) being more or less unchanged since at least October last year. A general rule of thumb is that the longer a market moves in a sideways direction the greater will be the intensity of the breakout.
Now notice how close many of the charts are to breaking to multi-week highs (equities, commodities, gold, corporate debt, and high yield currencies) or multi-week lows (US Treasuries). Which market will break first? We don’t know for sure, but what we are reasonably certain about is that once one breaks the rest will follow in quick succession.
We continue to be positioned for bullish breakouts in equities and commodities and bearish breakdowns in US Treasuries and the US Dollar.
