We got nice follow through in precious metals and mining stocks yesterday as they did not simply sell the Fed news but went up more on Thursday.

Now I think we have a clear direction in gold and mining stocks, but not everything in the financial markets is so clear.

What I find the most confusing at the moment is what is happening in the junk bond market. Look at this chart.

(Click on image to enlarge)

That is a move that doesn’t make much sense to me. And from a fundamental basis, it doesn’t either.

If the Fed can’t raise rates anymore because the economy isn’t growing so fast then why did JNK have such a big rebound?

Maybe it isn’t very liquid.

Or maybe something else is going on.

It is very odd – it looks like it will spend several months now forming another top as it can only go up so much.

The bond markets are very important to the stock market and what they do going forward will have an impact on everything.

The good thing about the markets is we don’t have to trade everything. If something is acting confusing just trade where the trend is more clear and profitable.