Defensive Gold and Treasuries Bullishly Break Resistance

Feb 24, 2017: 11:53 AM CST

File this under “very interesting” – defensive markets Gold and Treasuries just reversed higher.

If this continues, we could see a bearish development for the US Stock Market (money flow).

Let’s take a look and see if the breakout holds:

For some perspective, see our featured post “How Other Markets Behaved while Stocks Surged.

In it, you’ll see a broader look at the Money Flow across markets given the stock market’s recent surge.

Gold – and Treasuries – reversed higher on positive divergences in December and now hit a new phase in the reversal.

Gold broke above the $1,250 level this morning which is a key price pivot that confirms the bullish rally.

In fact, if Gold goes ahead to break above the 200 day SMA near $1,280, it would suggest a sustained rally through $1,300 and beyond.

That may not bode well for the non-stop uptrend in stocks.

We’re seeing a similar bullish breakout and reversal perspective on defensive US Treasuries:

The pattern is very similar with the collapse lower in November and eventual divergent reversal in December.

The Ten-Year US Treasury Note just broke above its resistance level at the 125 index level.

Once again, a sustained (valid) breakout here suggests price will continue through toward 127.

Unless these are just bull traps and false breakouts, it could suggest a turn in Money Flow from bullish/offensive to bearish/defensive.

Even if you’re just trading stocks, watch these markets to see what happens next.

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Corey Rosenbloom, CMT

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