Mover Mike

Those are the words of Clif Droke. Clif Droke is the editor of the 3-times weekly Momentum Strategies Report which covers U.S. equities and forecasts individual stocks, short- and intermediate-term, using unique proprietary analytical methods and securities lending analysis. He is also the author of numerous books, including most recently "How to read chart patterns for greater profits!"

Droke writes in his latest article, "...the message of the bond market is one of the more exciting and optimistic messages being sent anywhere in the financial markets right now and it behooves us to pay close attention to what bonds are saying."

Droke first looks at the Libor Rate Chart since the first of the year.

...the Libor rate has been coming down conspicuously ever since then and has not approached the high levels of fear of over two months ago. The public remains afraid, yet the monetary powers are clearly not as worried over the state of U.S. financial affairs as they were earlier this year.

Next, he looks at the Treasury yield curve

The Treasury yield curve is calculated by dividing the 10-year Treasury yield into the 3-month T-bill. On a very basic level tells you gross profit margins of financial institutions. They borrow short-term money and loan it out at long-term yields.

The 3-month T-bill closed Friday at 1.32%, the 10-year Treasury closed at 3.74%. In six months we've gone from an inverted curve in which the short term is higher than long term to today when 10 year Treasuries are almost three time the short term rate. Droke writes, "There is some lag time between the improving yield curve and economic performance, but probably by mid-summer you’ll be seeing some noticeable improvements in the economy."

The next chart Droke looks at is the 2-year Treasury yield minus the Fed Funds Target Rate

Whenever this graph shows a rising trend, it indicates improving monetary liquidity. Whenever the graph goes above the “zero” line and into positive territory it means that monetary liquidity has been turbo charged and the results will be powerful. The trend has been rising for some time and isn’t far from going into positive territory.

The 10-month price oscillator of the 10-year Treasury is way over sold and "suggests a reversal in the downtrend for Treasury yields soon." Rising yields, he says, "the more bullish will be the implication for monetary liquidity."

Finally, Droke has a chart of Securities Lending and Permanent Open Market Operations:

Droke says "The Fed has been loaning securities at a rate not seen in its history."

That's why he says, “Look forward, not backward. Better times are coming!”