A few reasons why I am shorting this bounce

Divergence between the dow and nasdaq is becoming more apparent. I believe this is more of sign in change of market dynamics.

It appears that more than likely we will remain in a range bound market... however my bias is still to the downside.


--MIKE
 
Divergences can last for many months.

Just take a look at how the Dow outperformed the broader market for much of 1987 until the CRASH, when rates were at 10% on the Long Bond.

This time around, rates are under 4.00%

With no INFLATION in sight. And trust me . . . The Bond Market Vigilantes can smell inflation a thousand miles away!

:p
 
Quote from waggie945:

Divergences can last for many months.

Just take a look at how the Dow outperformed the broader market for much of 1987 until the CRASH, when rates were at 10% on the Long Bond.

This time around, rates are under 4.00%

With no INFLATION in sight. And trust me . . . The Bond Market Vigilantes can smell inflation a thousand miles away!

:p
More...

You make valid points. Which in turn makes this more of a range bound type market.. where big moves in either direction are gonna be faded.

The outlier is the inherent weakness in the Nasdaq and semis.. they are sticking out like a sore thumb.
 
Today's action smells like a big asset-allocation into bonds and out of the S&P.

The seller came in and hit the S&P hard earlier in the session while buying up the Bonds . . . Looks like he came back later in the day to sell S&P's again just after the T-Bonds closed, thus tanking the S&P into the close.

This is typical action of an asset-allocator.
ie.) First Quadrant of Pasadena, CA.
 
Quote from waggie945:

Today's action smells like a big asset-allocation into bonds and out of the S&P.

The seller came in and hit the S&P hard earlier in the session while buying up the Bonds . . . Looks like he came back later in the day to sell S&P's again just after the T-Bonds closed, thus tanking the S&P into the close.

This is typical action of an asset-allocator.
ie.) First Quadrant of Pasadena, CA.
More...



Good observation.
 
"As for interest rates, the long bond is showing a tremendous amount of "bid" to it, even in the face of continually rising oil prices, a huge move in the metals ( copper at 6.5 year highs, silver as well ), and grain markets with soybeans having surged almost 80% since September of last year. However, the 10-year bond is still trading at roughly 4.05% Is there something that the Bond Market participants know that the the rest of the "interest rates are going up" crowd doesn't?

I think so.
But don't take my word for it.
I've only been trading since 1980."

Waggie,

would you care to explain why the Bond Market participants don't think the interest rate would increase in the next few months?

CRB index are sure showing sign of some life,no?
:D

Economy growing at roughly 4%, jobs picture improving, earnings improving...

Thanks.


:cool:
 
PIMCO does have a StocksPLUS investment approach which is an enhanced equity index product designed to earn excess returns over the S&P 500. And yes, it does use futures contacts on the S&P 500 in an "actively" managed fashion whereby a short-duration bond portfolio backs the futures contracts.
 
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