The pullback in September was a warning

<p>Stock markets continue to rally but the rally is not the start of a long advance, it is part of the final subdivisions of a terminal pattern. When markets are near the top sometimes the final move up does not materialise, therefore an increasing number of investors are on the edge ready to sell. As soon as some bearish news emerges they sell, this happened in September and the S&amp;P 500 dropped more than 5% in a month. That was a warning the rally is tired. I suspect something else will cause a correction, probably the rise in bond yields.</p>
<p>If you observe commodities and cryptos, they are rallying, a sign inflation will go up. This will push yields higher and the stock market will correct. It is when the stock market finally turns down that yields will go down. The level at which the 10Y yield becomes a problem is not known, it could be 2% or higher, I think yields can go up more before stocks turn down. I hope I am wrong on the 10Y yield, I hope the 10Y yield does not rally further because this would hit gold and I am long gold.</p>
<p>Gold and silver are strong. You can see each time the 10Y yield rallies gold declines. However gold is strong, despite the rise in yields because inflation is rising. The gold rally started at the end of September at the same time the 10Y yield has been rising, this is a sign gold is strong and as soon as yields decline gold will go up like a rocket (and silver too). Sometime in the future the great rotation will happen, a period in which investors will switch from the stock market and cryptos to commodities and precious metals.</p>
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