Minor pullback or correction or a crash ?
These are the thesis many technicians & traders are grappling with......
Some technicians can "clearly see 1500"
Some traders are bracing for much much lower than that ?
What are the "rationale" for these numbers ?
OH .....10 yr bond yield is @ 2.828% from 1.55% a 55.59% jump in yield......
OR... TLT has crashed from 128.50 to 102.67......a 25.83 points drop or drop of 20.10%
IF these TUMBLING numbers in last 12 months are telling us so much........WHY have we :
-Continued to make series of new HIGHS in equities?
-While bonds are tanking & Yields are rising, we have gone from 1250 to 1709.67 a jump of 459 points or a jump of 36.72% in S&P 500...
- We can draw a chart which could be exactly REVERSE in the last 12 months......TLT vs S&P 500
- While the PANIC is setting in, we have corrected only 3.34% in S&P 500 from all time highs
NUMBERS speaks LOUDER than LOGIC ?
YES...we can all PANIC & sell everything...because we "see trouble ahead"
BUT...the question IS......what trouble?
IF Higher interest rate is going to KILL housing & SLOW US economy to a CRAWL....then why would Fed going to TINKER with Bond purchase.......LOGIC should tell us that FED should be giving MORE support by buying $100 Billion in MBS.........
BUT Wall Street is not that predictable or RATIONAL...TAPE always goes to one extreme or other.....so currently we are correcting MORE than what Fed may be TAPERING to.....my guess is Fed may Taper from $85 Billion to $70 billion & may monitor the impact on economy.......
Once Fed action is OBVIOUS then 10 yr can come down to 2.5%.......
The minute this "OBVIOUS" strategy is concluded upon......watch 10 yr yield come to 2.5%.......
Then the RALLY CONTINUES to series of new HIGHS again !!!!!
Please factor ongoing improvement in Europe & China which is starting a new BOOM in base & precious metals......
We MAY have COMPLETED this minor pullback with minor uptick in interest rates......
YES housing will be stable in a 2.5% yield or 4% in 30 year mortgage......
These are WORKABLE & DESIRABLE trend......
Do NOT fight healthy MIX......
BLOG does NOT give buy or sell.
Saleem
10 comments:
Hey Saleem,
I will admit I am uncomfortable with any outlook at the moment, even the one which I put forth in my writeup.
Something just seems "off" to me (and has for a couple weeks but until now I've only written about the confusion instead of acting). I could play bull, bull, bull before, but certain technical and fundamental issues now have me on pause. With many traders currently on polar opposite sides, the next move will likely be vicious. I think it's important for everyone to be careful and thoughtful right now--clearer signs either way are likely to emerge in the coming days/weeks.
Stocktrader
Hi Stocktrader,
Stock market is an interesting melting pot...where extreme opinions duke it out & by close we all know which thesis had more follower.
I definitely believe that "currently" there needs to be a "buying focus" not selling......that was two weeks ago.....
I am happy that "froth has been taken out with 225 point plunge"
Option Expiry played a role in putting "fear back"....which IS a good thing....
I remain optimistic after this 3.34% pullback.......
Saleem
Hey Saleem,
Sold KOG @ 9.70.
I still really like gold here, but not sure if or how I want to play that game.
Stocktrader
Hey Saleem,
Ok. I stepped into the GLD @ 131.83. We'll see how this goes. I actually bought quite a bit of it--about a 20% portfolio position.
Stocktrader
Hi Stocktrader,
GLD is an excellent buy when gold is down......near term target for gold is $1450.....lot of room from your purchase of $131.83...$145.00
Saleem
Hey Saleem,
Yes, I think a $10 move could happen in a short time. Also, with the gold miners up nicely today, I think it confirms an extension of the up move in gold is coming.
Stocktrader
Hey Saleem,
Sold TXTR @ 34.05 to take profits. I also worry about the "active projects" portion of their revenue if global markets slow somewhat here.
Stocktrader
Hey Saleem,
And of course...I messed up on SRPT again. I can't sell until Wednesday without major portfolio penalties--hopefully it doesn't get too much more serious.
Stocktrader
Hi Stocktrader,
Is there a news on SRPT....or technical breakdown.....
Saleem
Hey Saleem,
A different interpretation of competitor GSK's trial is circulating today. An analyst on Friday put a positive spin for SRPT (which was the initial read for many), but doubts have crept in today about the overall space for those drugs.
Stocktrader
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