via Market Watch - Point Well Taken

One salient detail for determining the top of markets requires an inverted yield curve. But there is no chance that inversion will occur any time soon.

More likely guaging from ETF prices you can say that bets on the markets are overwhelmingly one-way bets, since opposite ETFs to market indicators are not being accumulated.

For example, the S&P ultrashort or the VXX are not showing much activity. ETFs are the way derivatives capitalize the market, and are undercapitalized, overleveraged bets on futures activity. Exchange Traded Funds, or the retail-focussed end of ETNs, are the way banks bet on markets, without capitalization requirements that you would normally have.

One notable example that did not provide a return the way it should have was the TBT, or the long bond short. It didn't move when bond prices corrected, which could have been an indicator that long bond prices would bounce back.

One thing that sets off this market and suggests higher prices is a lack of an inverted yield curve, which you would normally otherwise expect.

Market Watch

$IRX Weekly

There is a strong technical argument that short term treasury bill rates can become nominal negative, due to its close proximity with the zero bound. Nobody will believe it until they see it, since nobody believes that rates can go negative.

Even a small correction in the markets will be accompanied by unusual activity into treasuries and long dated bonds, accompanied with lower long term rates, and negative nominal rates up to two years.

The run-up of gold prices into 2011 was accompanied by negative nominal rates in German Bunds and Swiss treasuries.

Gold prices should be seeing some very positive developments since the Eurozone has begun discussing negative savings rates.

http://scharts.co/1cFDeTH

TLT Weekly

Gold prices saw a robust run-up and higher prices until the long dated treasury market corrected in price. The TLT tested a breakout on a measured move this week.

Gold prices have not responded to a climate of negative real interest rates, though the U.S. inflation rate is offically 2%. Shadowstats has shown that inflation rates are set much higher.

If long dated treasuries yield lower than 2%, then negative real interest rates will become a banality, although some discussion has already taken place on this in the media. Certainly short term rates have been far below inflation for years.

http://www.tradingeconomics.com/united-states/inflation-cpi

http://scharts.co/RuQIfK

$CDW:$Gold

$CAD gold prices have already tested the breakout and not come back just yet to test the line in the sand.

http://scharts.co/17HxjtG

-F6