FEATURED CONTENT

Bull or Bear Market… Doesn’t matter

Kyle Dennis’ new, 5 Min Strategy is poised to double Your Money Weekly!

Michael S. made 173% with Dollar Ace. So can you!

 

What the yield curve is saying about stocks

Jeff BishopJeff Bishop ·

The backstory: The yield curve is widely used as a predictor of future recessions. Generally, it shows when there’s a divergence between the outlook of the Fed and traders on future economic conditions.

When the curve starts to become inverted — or when the Fed believes short-term growth will be strong, while long bond traders and investors believe economic growth is slowing — it’s a sign that a recession could be in the cards.

What’s going on: The yield curve has been flattening; if it inverts, it could trigger a correction in the equity market. Check out the U.S. Treasury real yield curve rates over the past three years:

Source: Quandl

There’s still plenty of room to go before the yield curve is inverted; even if the curve starts to invert, a recession and market correction would take some time to materialize, months to a year or so after that kind of catalyst.

What to watch for: I expect the stock market to go higher and run up into 2018. But I’ll keep an eye on the yield curve and look for any clues in the bond market that could signal a downturn. If and when we see an inverted yield curve, I’ll be ready to make some bearish bets; until then, I’ll be patient and wait for a clear signal.

#-#-#

Jeff Bishop is lead trader at TopStockPicks.com and is co-founder of RagingBull.com. He runs short-term trading strategies, using stocks, options and leveraged ETFs.

You may also like

Exclusive System Tracks Wall St. Insiders

“Dollar Ace Simply Exposes Information That Wall Street Wants To Keep Quiet” Said Kyle Dennis
“One member, Wesley M., has already reported 360%+ gains in just a few short days. Don’t miss this!”
(Reserve Access Now)

“What Recession?!” Jason Bond nets $55,060 in realized profit in One Day

After going 6 for 6 on profitable trades recently, we caught up with Jason to ask how he did it.
Check out Jason’s exclusive interview revealing this tightly guarded strategy. (Watch Now)

RagingBull.com Co-Founder, Jeff Bishop, Launches High Conviction Trade Service

“We listen to our clients and we give them EXACTLY what they want, so we designed a service to deliver 1 trade, 1 time a week, with a 100%+ PROFIT TARGET, directly to your inbox every Monday before the market opens. (Read More)

Be a Better Stock Trader, Starting Today

Get the expert insights, tips and strategies you need to optimize your trading skills and profiles
START NOW