Rare Case of schizophrenia!

Stocks are rising, bonds are plunging! Rarely in my lifetime have I seen these suffer from a more extreme case of schizophrenia!

Almost never I seen bonds follow stocks at this close intimacy, but it makes sense as plunging bonds represent surging interest rates and that potentially could turn out to be pure poison for corporate profits, in turn, will be reflected in plunging stocks.
While this chain reaction sounds logical, but it doesn’t always unfold immediately.

And right now, the schizophrenic gap between bonds and stocks could not be more obvious or extreme - Just since early April, while the Dow has risen by more than 12%, the price of 30-year Treasury bonds has fallen by nearly 12%. My view is that no stock rally can withstand this pressure for long. Yet, strangely that's precisely what hordes of "professional" portfolio managers are recommending: a full house of stocks in your investment portfolio.

Investors that I talked to over the last three weeks seemed to agree with me. It is the madness of crowd – vaguely cognizant of the budget deficit crisis that driving bond markets into a collapse and on other hand still buying stocks in a knee jerk reaction to Wall Street hype.

Rallies in bear markets have an annoying habit of running up significantly following periods of dismal performance. Right now I'm looking to key indicators in sentiment, value and interest rates that suggest we are probably at or near the buying opportunity of a lifetime...something I've noted repeatedly since last March when sentiment reached the lowest levels in recorded history.