The comparative performance of the bond market (TLT and IEF) (in blue and green in this chart) versus the Dow 30 Industrial stocks is quite apparent.

All through this period I have been quite negative on the prospects for U.S. bonds. At some point soon, this picture will change. It will be bonds that outperform.

That's likely to be more the case that the U.S. stocks break down.

As a trader, your job is to increase the value of your portfolio, as well as increase the potential and lower the risks. You will do that by allocating assets from stocks to bonds and back on a timely basis.

And given that interest rates are rising quickly, it is appropriate to choose the short end of the bond market, say two years or less, or go largely to cash, as I did. Then as rates stop rising, you can move to the long end of the bond market, which presumably would be paying a higher yield and have the greatest likelihood of capital gain as rates/yields begin to fall.

If you wish to be exclusively in equities, a move comparable to going to the short end of bonds would be to hold the commodity-price sensitive stocks (energy and metals). Then a switch to the long end of the bond market would be like rotating out of the commodity sensitives, back to the interest rate sensitives (utilities, telcos, financials).

The capital market is a model " like nature. There is always a flow of money that keeps everything in balance. You have to get your head around that model and anticipate the flow. You must always be early, rather than late, because the cycle will happen and the big money is made earlier than later.