Markets are signaling caution on the intermediate term with the 80 period cycle now topping out. The long term cycle (9-12 month) is also nearing a top, but could help markets continue to climb a little longer. Use stops underneath the 14 and 21 day moving averages.

In the above chart, you can see that the historical 3 month treasuries (blue line) slightly lead the Fed funds rate (red line). That's an important consideration as inflation remains a the single most important fundamental factor that will influence the Fed's decision about where interest rates are heading. And those rates as we have discussed often, will have a direct impact on whether monies flow into or out of the markets.

On that chart, I have also plotted the US unemployment rate (green line -left scale), but inversely. Think of that line representing employment instead of unemployment and it will make more sense the way it is plotted. Notice how that line significantly LEADS both other data when it is rising, but shows no difference when it declines. In other words, as employment improves - back above 6.5% or better range, it won't be long before its inflationary effect is impacting the 3 month treasuries with rising rates which are followed by the Fed funds rates too.

I post that chart to help illustrate that for now, the Fed is pretty much stuck with keeping rates low, hoping for improvement in the economy where job creation vs. job destruction takes over. The slight up tick in employment we're seeing now provides some hope of coming daylight, but the Fed isn't even close to raising rates in any significant way - yet.

In summary, there's a long way to go with these low rates and a continuation of potentially strong markets, before institutional money starts to look at moving into fixed interest investments.

Shorter term cycles are weakening now (which has nothing to do with interest rates), so keep positions safe with stops underneath our layered levels at the 5,14,and 21 day moving averages.