Wednesday, February 8, 2012


Hi Folks,

We are getting ever closer to at least a short term top in the market. I think that around 137 in SPY(the ETF that mimics the SP500), would be the short term top in the market. So I am moving my general market bias from buying the dips to selling the rallies. The SPY is currently trading around 135 so I am comfortable shorting against the 137 level as my stop loss. In other words, if I short the rallies I would only cover the short with a significant push through 137 in SPY.

Today we have a no real news to speak of other than the 10 year bond auction at 1pm. That should have an impact on interest rates and more importantly my postion in TBT. TBT is the ETF that tracks the yield on the 20 year treasury. So with the opinion that TBT is going to move higher over the next few months, I am saying that there will be net sellers of treasuries. In bonds, price and yield have an inverse relationship. TLT is the ETF that tracks the price, not the yield, on the 20 year treasuries. So being bullish on TBT is the same thing as being bearish on TLT.

Thanks and Good Trading,


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