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The Dow Jones Industrial Average has hit new highs and the S&P 500 index has set records, while U.S. Treasurys continue to push higher. Each asset class competes for investors' monies, so typically stocks rally or bonds rally, but not both together.
Since stocks and bonds typically trade inversely, professional trader Jim Iuorio said Treasurys have advanced on fears the prolonged stock market rally could soon come to an end.
To pro trader Anthony Grisanti, it's foreign investment that's driving bond prices higher.
"My theory is it's the money that's coming in from overseas, with all the liquidity that's happening there. That money has to go somewhere," said Grisanti, founder of GRZ Energy. "If it ain't going into equities, it's going to go into bonds and I think it's coming from them."
If you're counting out China, it's possible you're making a terrible mistake.
For months chatter on the Street had everything to do with China and whether the world's second largest economy could underpin global growth.
Lately Wall Street had become skeptical, especially after a high profile report suggested China's rapid expansion had generated the largest housing bubble in history.
Considering the housing bubble in the US was responsible in part for the worst downturn since the Great Depression, a bigger one in China seemed disastrous. Wall Street's concern seemed warranted.
As a result, sectors of the stock market tethered to China had lagged the broader market.
You might have agonized over the decision back then. Buying gold protects you from inflation, but buying stocks entitles you to a cut of future profits. Gold is shiny, but lots of stocks have cool names. So which one would you have chosen?
Here's the thing: It wouldn't have mattered.
On the first day of June in 1990, gold futures and the S&P 500 were each trading at about 360. And on April 3, 2013, gold and stocks traded at the same nominal level again—but by then, that level was about 1,550.
The stock market has been on a tear lately, with the Dow Jones Industrial Average hitting another all-time high of 14,706.52 on Tuesday, but the bullish Jeremy Siegel argued that the Dow could see 18,000 by the end of next year.
(Read More: Dow Touches New High)
To Siegel, professor of finance at the University of Pennsylvania 's Wharton School and author of "Stocks for the Long Run," there are two reasons the market could keep pushing up.
To start, Siegel noted that stocks are trading at historically cheap multiples. Equities are so inexpensive that no asset class is more attractive, he said. Take Treasury bonds. With the yield on bonds so low, he thinks you can easily pay 18 to 20 times earnings and not be overpriced on stocks.
(Read More: CNBC Explains Treasury Bond Prices and Yields)
"Given what I see going on in the rest of the world and all this liquidity coming in, people are going to look to stocks as that hedge with earnings power and dividends, which none of those other asset classes have," Siegel said on CNBC's "Futures Now."
He added that stocks will likely stay strong as long as the Federal Reserve maintains its policies on bond purchases and record-low interest rates. In September, the Fed launched a third round of quantitative easing, in which it has bought $40 billion of mortgage-backed securities per month, primarily in mortgage-backed bonds.
(Read More: Gold Pares Losses, but Equities Lure Investors)
This month, the precious metal and the S&P 500 index have been trading at the same nominal price for the first time in three years. The last time that happened, some thought gold was the better short-term bet.
Predictably, gold rallied on Friday following news that U.S. employers hired at the slowest pace since March, adding just 88,000 jobs, while the unemployment rate notched lower to 7.6 percent. But the precious metal wasn't able to hold onto its gains, which is striking because I don't believe there is any doubt the U.S. Federal Reserve will continue quantitative easing through the summer.
(Read More: Gold Slides After 2% Rise)
So why is this bad for gold? Because once again central banks around the world are beating us at the liquidity game. On the same day the jobs number was released, the Bank of Japan announced it would double its current round of asset purchases and then the Bank of England said all options are on the table as far as dealing with their economic woes.
Then, the Bank of Japan conducted its first bond-buying operations on Monday, saying it would buy 1 trillion yen of government bonds with maturities between five and 10 years, and 200 billion yen of bonds with maturities exceeding 10 years. The central bank plans to inject about $1.4 trillion into the economy in less than two years.
(Read More: Yen Dives as BOJ Jump-Starts Stimulus Plan)
As i have stated before: as long as the U.S. dollar appears to be strong and the government — and I stress government — reports little to no inflation, gold will continue to underperform.
Sure, the mysterious metal will have its bounces. Gold's allure can generate interest, but every time it does, i will look for a place to sell. If the dollar starts losing some of the strength it's had against the yen, euro, pound and Aussie dollar, then I will rethink this trade. But until then, it's sell the rallies in gold.
From a technical standpoint, the first resistance I see is $1,588 followed by $1,600.
Read on for 10 Things You Need to Know to Trade Futures
— Reuters contributed to this report
Gold has been in a world of hurt lately, taking two straight quarters of losses and unable to rally despite any number of supposed tailwinds. But something happened on Friday that gave the precious metal a long-awaited boost: The unemployment rate fell to a four-year low.
U.S. employers hired at the slowest pace in nine months in March, adding just 88,000 jobs, while the unemployment rate notched lower to 7.6 percent, largely because people dropped out of the workforce, according to the Labor Department. The unemployment rate is the lowest since December 2008; the labor force participation rate is the lowest since 1979. Analysts polled by Reuters had expected a gain of 200,000.
(Read More: US Job Creation Plunges, but Rate Drops to 7.6%)
The weak March jobs number was bad news for crude, but it certainly could have been worse for traders who were long black gold.
Only 88,000 jobs were createdwell under expectations of 200,000 new jobs. And while crude futures still dropped on the morning, they recovered nicely from their low of $91.91.
(Read More: Unemployment Rate Falls, but Don't Pop the Corks Yet)
So if the jobs report truly delivered terrible news about the economy, why did traders jump back into oil?
"It's a bad jobs number," said GRZ Energy President Anthony Grisanti. "But still, 88,000 people were hired. It's not like economic activity is stopping. There's still growth."
In addition, Grisanti points to the action in the dollar, which dropped off the number. "A weak dollar means higher commodities, and that's why crude is holding up."
Addison Armstrong, senior director of market research at Tradition Energy, similarly credits the dollar index with crude's partial recovery.
"Much of the news out there is bearish, and it certainly felt justified earlier this morning when crude was down as much as it was," Armstrong said. "But given that the dollar turned around on the non-farm payrolls number, that took some of the downward pressure out of oil."
And there's another factor. Crude has had a terrible week, and it can really only fall so far. After crude hit its morning low, Armstrong said, "you probably saw some short-covering."
Meanwhile, Grisanti is hoping crude does fall back below $92, but not because he's bearish. "If it gets back down to that $91.90, I would definitely be a buyer," the trader said.
Initial jobless claims rose to the highest level in four months last week, a third straight rise, indicating that the labor market recovery in the world's largest oil consumer slowed in March. Meanwhile, North Korea warned that its military has been cleared to wage an attack on the U.S. using "smaller, lighter and diversified nuclear" weapons.
Light, sweet crude for May delivery was down $1.30 at $93.14 a barrel, having fallen to $92.12, the lowest intraday price since March. Brent crude futures were down $1.25 to $105.86 a barrel, having earlier touched a low of $105.29, the lowest since early November.
(Read More: Brent Bounces Off Five Month Low After US Data)
Still, professional trader Jim Iuorio isn't ready to call it a buying opportunity.
After gold dropped to a 10-month low of $1,539.74 an ounce on Thursday, breaching a key technical level of $1,550, professional traders disagreed on how to trade it but came to a consensus on what's pushing it lower: U.S. dollar strength, thanks to money-printing by central banks around the world.
The dollar rose strongly against the Japanese yen on Thursday after the Bank of Japan announced aggressive measures to ease monetary policy, including a plan to double its holdings of bonds and stocks in two years. The yen fell as much as 2.9 percent versus the dollar, its largest one-day drop since Oct. 31, 2011 when it fell as much as 4.78 percent.
(Read More: Gold Ends Lower Despite Stimulus Hopes)
"We're in this mode where any sort of dollar strength—doesn't depend on why it's dollar strength—causes people to sell out of their long-term bullish positions," said pro trader Jim Iuorio from the Chicago Mercantile Exchange. "We were looking for what happened to the Japanese yen to happen, so I do think there is a bounce coming up relatively quickly in the short end."
Iuorio remains long gold, adding that he plans to buy the June gold futures contract at $1,548 with a target of $1,575 and a stop of $1,537.
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