Editor’s Note: As one of the most accomplished traders of our time, my colleague Jeff Clark has spent the past 40 years successfully using chaos and volatility to his advantage.
In fact, he has accurately predicted every volatile market period this century, including…
- the Great Recession of 2008…
- the Covid crash of 2020…
- the bear market in 2022…
- and the tariff scare in 2025.
Volatility in the market is nerve-racking. But what most investors don’t realize is that volatility is the best opportunity to make money as a trader.
This is Jeff’s specialty.
He’s making another prediction that the stock market could be heading for more trouble in the coming weeks and months.
Now, I’ve known and respected Jeff for two decades. That’s why I’ve highlighted his insights for my own readers many times over the years. And I’d like to take the opportunity to do that again today.
Today, Jeff is joining us to share what he’s seeing in the bond markets.
Take it away…
This is the most dangerous chart in the financial markets…
This is a chart of the iShares 20+ Year Treasury Bond Fund (TLT) from about a week ago. TLT is an exchange-traded fund that tracks the action in long-term Treasury Bonds.
And it’s breaking down.
Why is that dangerous?
Because, as bond prices fall, longer-term interest rates rise. And rising rates are bad news for stock prices.
Please understand, the Federal Reserve Board sets the target for short-term Federal Funds interest rates. That’s the rate over which stock market investors have been obsessing. That’s the rate most folks expect the Fed will cut two or three times this year.
Bond investors determine what happens with longer-term interest rates.
Based on the look of the above chart, TLT looks set to fall. That means longer-term rates are set to rise.
TLT peaked in September 2024 near $99 per share. It then declined all the way to $84 in January, where it found support and bounced. That bounce ran out of steam last month. TLT has been falling for six straight weeks.
Now it looks like TLT is set to lose the support of the $84 level. If that happens, we could see a quick drop to the October 2023 low near $78.
That would put long-term interest rates near 5.6%, or even a bit higher. We haven’t seen long term rates that high in 20 years. And it’s happening at a time when the U.S. Treasury has to refinance trillions of dollars in maturing debt, and when the U.S. government is trying to pass a budget that will add trillions more to the deficit.
Stock market investors have ignored this situation, so far. TLT is down 7% over the past six weeks. Yet, the S&P 500 is higher.
Somebody is lying.
Stocks and Treasury bonds typically move in the same direction. So, this sort of divergence is notable.
One of these assets is due for an epic reversal. Either Treasury bonds need to rally to catch up with the action in stocks, or stocks are going to be pulled down to match the action in bonds.
The widely accepted opinion on Wall Street is that bond investors are smarter than stock investors.
We’ll soon find out if that’s true.
Best regards and good trading,
Jeff Clark
Editor, Market Minute
Now, let’s take a look back at what we covered here at Smart Money this week… and what you can look forward to in your next issue.
Smart Money Roundup
Why “Safe” Investing Isn’t Always Safe – and One Risk Worth Taking
May 28, 2025
We humans tend to convert potential safety benefits into performance benefits. A motorcycle rider who is wearing a helmet tends to feel more invincible than a rider who isn’t, potentially leading to the sort of disasters that occur when risk wears the guise of safety. It may surprise you to learn that it’s the same on Wall Street. So, continue reading to find out the best way to diversify into foreign markets – one risk I think that’s worth taking.
This Canadian Company Is Immune to Tariffs – Here’s How Eric Made a Quick 200% Gain on It
May 29, 2025
On one side of the trade war moat, non-tariffed firms are finding enormous success as their competition melts away. On the other side are companies liquifying on a warm day. And this appears to be taking Wall Street by surprise. In this issue, Tom Yeung highlights two company, one in each group. Plus, he shares Eric’s strategy that helped earn subscribers a 200% gain in just seven weeks from the company on the right side.
Google’s AlphaEvolve Is Cracking 300-Year-Old Math Mysteries — and Could Boost Portfolios
May 31, 2025
Google’s new Gemini-powered AlphaEvolve isn’t like the typical AI agents that we’ve talked about. This new system creates and evolves computer programs using what Google calls “evolutionary programming” – essentially natural selection for code. In Saturday’s issue, we dive more into AlphaEvolve and explore why this is a pivotal moment for the AI Revolution. Then, we take a look at how Louis Navellier has been preparing investors for a larger framework at play… a strategy that could deliver life-changing wealth.
3 Certainties for a New American Prosperity… and One Stock Set to Profit
June 1, 2025
Uncertainty is everywhere. Just look at the fact that more than 350 S&P 500 companies cited the word “uncertainty” in their latest earnings calls. But the word also gives many the excuse to be lazy. So, Louis Navellier is here to share the real story: three major positive economic shifts that are already happening with full certainty. Read on to find out how this plan could trigger a generational bull market – and how you can join.
Looking Ahead
I recently sat down to interview Jeff Clark about his secret to handing his readers more than 1,000 winning trades during volatile times…
It’s something he calls the “Chaos Pattern.”
In our conversation, Jeff shares compelling new research that shows how chaos could soon be dominating the markets once again. He’ll reveal what he sees coming… and how he trades the market right now.
Hint: It’s by using a new, powerful stock screener that scans the market for Jeff’s “Chaos Pattern” every single day.
That interview will be available in your next Smart Money.
Stay tuned…
Regards,
Eric Fry
Editor, Smart Money
