Amidst all the insanity, my view of the market in the coming weeks is simple: if we push above ~905 on the S&P 500, we'll finally getting the honkin' big countertrend rally everyone's been anticipating.
I'm seeing so many tortured analyses out there, and I'm getting the feeling they're all making it way too complicated. The EUR and S&P are both showing nicely-formed bottoms, and the optimistic trifecta we're approaching (holiday/New Year's/Inauguation) of yay, yay, it's all better now, is going to provide the fuel.
Let's take a different tack and look at the last bubble: bonds. You just don't see charts like this much in 2008……..
To me, charts like that look prime for shorting. Particularly when you examine the action in the futures markets:
People have quickly become inured to 0% interest rates. To me, this is still a breathtaking phenomenon.
What seems appealing to me is to short the first graph (below) and buy the second.
I'd be interested in hearing other viewpoints on good ways to take advantage of a fall in the bond market.
One last thought – – as an example of why stops are so important, we have SRS. I became enamored of SRS, bought a bunch, and wound up making just a few thousand bucks (as opposed to the five-figure sum I was after). But I'm glad for it, because I used stops (this is the one rule I am really, really good about). Look at that horizontal line, and see how plainly the price action told you it was time to get out.
Hoping for things to "turn around" is an invitation to disaster.
