I have been tweeting and
writing constantly about the bubble in yields. I don't believe the economy is going into a dive but I am not blind to the fact that the markets are finding risk taking few and far between. However, there is a point where enough is enough and 3.70% for 30 years is foolish! Perhaps I eat my words on this but at the moment, the markets saw a reversal today with the long bond making a new low in yields while the S&P 500 did the same on the short term side of the ledger. As the 10 minute chart above shows, the markets followed these moves with a reversal higher. I would hazard to guess, barring a very weak GDP number on Friday that we have seen the lows for yields for several months if not years. And for those buying down here and getting into bond funds of all kinds, losses can occur while the stock market leaves you behind.
I do have one concern and it relates to the daily trade of the S&P. Essentially on the close today I had 3 different sell signals show up in my models and they were of the high probability kind. If we reverse from these levels above 1050, it could lead to a nasty selloff towards the 1000 level and below if it gets out of hand. I am not playing it this way and think the market can continue higher but the markets have been very unpredictable of late.
No comments:
Post a Comment