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If I were forced to put opinions into two camps, it seems that people are either in the "Deflation Camp" (lower growth or contraction due to over-leverage) or the Inflation Camp (high inflation, maybe hyperinflation due to excess money printing by the Fed).

The two-pack below compares a key inflation index, the Morgan Stanley Commodity Related Equity Index (CRX), against the yield on the 30-year bond (TYX). Both of them have made a series of lower highs since May of 2011. Both have rallied over the past few months, taking both of them back to key falling resistance lines.

 

 

We should know a good deal more about which camp has a better grip on reality based on how the CRX and 30-year yields handle these resistance lines.

Is this a bear trap? Or is a growth/inflation breakout close at hand? Stay tuned ... this should be a big deal to a good number of investors!