The Morning Morsel: Are Bonds Smarter Than Stocks?

Posted by UpsideTrader
on August 26th, 2010

TBT

So in keeping with the need for something new to talk about and in an effort to find the next “big thing” I give you TBT. It’s all the craze and all the day traders are now macro sages in the government debt market.

I care nary a wit about the “why” of things anymore, the market always comes out much smarter than me in the end. It has been a wild week, put on some shorts, get stopped or you have to cover in a hurry, put on some longs, get stopped or run for the hills when the market tanks. Yes, that is the what the market does,but THIS market doesn’t give us the luxury of relaxing for even an afternoon as things change that fast around here.

Abysmal housing data? The XHB rallies. You know what I mean, the market has become crazy town.We all know that one day or afternoon does not a trend change make, but maybe we catch a rally in here.

The financials (XLF) broke the early July 2009 lows that I thought might happen, as I said yesterday though, it is also the spot where it always stages a rally, we’ll see if it has the desire to stage a rally for about the ninth time off that level over the last year.

Getting back to the bond market, the TBT (20 year ultra short treasury), gapped down yesterday, then had a pretty nice rally from bottom to top. The daily chart may have bottomed, maybe not, we’ll see. If it has put in a bottom and the “risk” trade slowly returns, it will be good for stocks.

The market is still on eggshells and continues to be as nervous as a valet at a Baghdad parking lot….may the wall of worry resume.

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