The symbol “TLT” which tracks the value of the “U.S Treasury 10 year bond price” has “firmly been rejected” at a very strong level of resistance around 107.50 and continues to fall – now at 105.06
When “bond prices fall” ( the price at which you purchase the paper ) in turn “bond yields rise” ( the rate of interest paid out on the bond ) – as simple mechanics of how the bond market works.
When we see bond “yields rise” and “bond prices” fall, we better understand why the Fed currently buys around 85% of the new debt issued by the Treasury, as “if they didn’t” – bond prices would crater, and the rate of interest owed would skyrocket crushing the U.S under the “already unsustainable” debt load / interest payments.
We saw Greek bond yields move upward in the neighborhood of 27% to up to 48% during the crisis, signalling to the world that in order to “encourage investment in their country” bond holders would require this kind of payout.
This kind of rise in bond yields is a massive forward indicator that ” a country is in real trouble” as sellers dump like mad – and bond yields shoot for the moon.
Always ALWAYS keep your eyes on the bond market for signals of larger moves to come.
Hi kong, bond yields up normally equities should fall no? Btw, if you feel that mkts have top in may, why is it possible for them to keep msking new highs bar djia?
Great question Robert…which brings about another one…
How come I’ve been “generally bearish” the entire last 6 months – but just keep making money anyway?
Really….if things are up , up , up , up (as they “appear to be”) then how come my consistant stance / dancing in and out “bearish” keeps on performing?
Another question I have, and hopefully Andrew can get in here too – which stocks then?? with the index “virtually flat” across the last 6 months what would you have “been into”? or consider buying here?
The fact of the matter is that smart money has been selling the entire time,as the “illusion of new highs” continues playing out in the “few places” the banksters and Ben work their magic. If you’ve been able to find em….trade em….AND make money – you are a true hero of mine.
I look at simple “ringers” like CAT , APPLE , IBM ; blah blah blah….and see nothing but red / down.
I am curious too.. look at today… mkts green now in just 1-2hrs.. how do thry push upthe indices when the major component stocks are off their all time highs? Fed cant even stand to see the mkts being red for 1 second
Exactly Robert.
You are watching the biggest ponzi / calculated transfer of wealth every witnessed. And interestingly ( as Andrew also noted ) the “real retail” ( and pardon me for saying but.. ) last to the party / bagholders ALWAYS get off the couch at the absolute last minute with revelations that “hey! everything is gonna be ok!!” We should buy Facebook blah blah….
Right at the absolute top of the top.
Take a peek at X, CLF, FSLR, CRM, and GME, for example. What is you had levered up in these names over the past several weeks? Just like Forex, though, you have to find them before they move.
You’ve got me motived to apply some science n math here, as you’ve got it 100% – stocks going up!
I’m tooling the Kongdicator for stocks pronto, and will begin to post / discuss entries BOTH long and short.
That should give “us all” a littel more to work with.
Other than the Yen earlier this year, the Forex markets I follow haven’t really been trending on any significant time frame (i.e., daily or weekly). You have had to catch the bounces off support and resistance in the intermediate sideways channels. I guess that was your forecast earlier in the year though (charts looking like a 3 year old with crayons).
Absolutely Andrew – It’s been some of the most difficult / grinding trading these past 6 – 8 months short of the massive move in Yen.
We’ll get some “open road” here again in one currency or another, just that for most traders – they don’t have any gas left in the tank when it finally comes!
I scaled back position size some 25 – 33% in the last months, and have spent far more time at the computer in order to keep that mandate of “taking profits” often. Knowing when to hit the brake or the gas, has proven to be a valuable skill this past year.
We’ll catch a couple big moves “soon enough”.
What’s interesting to observe Robert – “tomorrow” or perhaps “in 2 days” markets could just as easily be back “below” the May high as…..this is still grinding across the top in my view.
If anyone would have asked me just ” one week ago” or perhaps 2 it would have been more like “so how low do we go Kong?” etc…
2 days and this thing is/could be exactly where it was 6 months ago. A guy could have sat out Syria risk , gove shut down fiasco , debt ceiling bullshit etc – and entered last week for the same % gains. Frankly – the last 6 months…I couldn’t be bothered.
Hmm that would be impossible.. although i hope it happens lol, seems that they cant find anyone to unload to and thus all they can do is to keep moving it up hopefully someone buys it?
These kinds of market scenarios will often move / correct in more of a “crash type” move, as you’ve got it……all fumes, no buyers…just Ben the banks and the computers.
Volume really tells the story there.
They’ll find an excuse / computer glitch / reaction to China leak / EU Zone bank scam er something……
Timing that will be impossible so…..keep tight stops / watch close / don’t bet the farm / and get on in there. You’ll have to fight like mad to keep any profits.
Well.. lets hope that pple wakes up and wise up that the fed is a private entity and is not there to save the masses but to profit from them….
Well Robert…I find it very hard to imagine, as I think it’s fair to say – the large majority of people don’t really understand ” or feel they need / want to understand” most of this stuff.
I read yesterday that 48% of the U.S is currently in “some kind or another” form of government sponsored program ( food stamp , unemployement insurance etc..) and that the education system / scoring has fallen well below the top 30 countries including Barbados, Korea , Greece, Cuba etc…
To Andrew’s point as well – How many of these people do you honestly think have the interest OR the means to buy stocks?
One thing i noticed is that the yen carry trades seemed to be propping up the mkts..a strong yen shld also send equities down
The last piece of the puzzle here fundamentally Robert – Great eye.
The Yen is pretty much the key to this entire thing staying on it’s legs as…..
3X bigger QE than U.S – and a freakin “BOATLOAD” of money from Japan dumped into U.S stocks as a result.
So…..we see the correlations ” these days” lookin more like JPY down = U.S.D up ( as Yen is converted to Dollar in order to buy U.S denominated assets ) = U.S stocks up!!
When you see JPY “really start to rise” – you’ll be sure to see U.S Equities dump hard.
It’s firmly my view that the Japanese stimulus has been largely responsible for the “latest run” in U.S ramp/pump job as…..
We know the Fed’s game just puts money in the banks, and that for the most part “retail investors in America” are well…….standing in a line somewhere so……
Hot money / JPY converted to USD and boom – U.S dollar has “remained boyant” and U.S stocks have moved up.
Nikkei is weak now, and WE KNOW JAPAN IS GOING TO INCREASE QE in APRIL – BUT NOT UNTIL APRIL.
Between now and April – JPY is everything.
The great thing is….
You guys are really diggin in, and working to get some of these ideas under your belt.
The more information you go over, the more angles you view it from etc – the clearer the bigger picture becomes. You’ll look at this for a while, then jump to some other area of the markets / dynamics then another etc…and over time – take what you can use, and dismiss the things you can’t.
Then….if you can believe it – the entire thing flips on it’s head and you’re right back at beginning again. Peeling another layer of the onion, “re reading” things from ages ago, throwing around ideas with new people etc..
Last I looked they call it “learning”, and I’m always up for that.
kong. ilike watching the bond prices and its believd that when the yield rises demand for the countrys currency rises too along with stock. of recent i’ve noticed situations where bond yield rises while stocks fall, how do you interprete this.
It’s difficult to pull the two / three things apart when you’ve got the Fed’s hands in every single one of them.
The general correlations you’ve outlined “should” hold true, but we aren’t in a “freely traded market”.
The Fed’s 85 % of monthly purchases currently has “that one” skewed considerabley, as well the POMO in stocks etc..
I originally outlined my belief that we will see bonds “lead” , then the currency and LASTLY stocks. ALL BEING SOLD!
Thus far…..bonds clearly wacked, the currency bouncing ( but in general free fall ) and stocks on fumes.
Stocks will be last to go…as all things U.S are sold in my view.
Wonderful post regarding TLT and bonds for us blondies. Hope u r well. Kerry
Thanks Kerry!
Damn bonds….certainly not the first / easiest thing I ever learned – ugh.
All the best you as well!