Hope you are all enjoying the fireworks. I'm here to throw some cold water on that.
We broke the descending trendline in December of 2009 on the 10 Year Treasury Note and now we are finally testing that trendline. We are also closing a gap from 6 months ago. At these yields, investors may start to rotate out of government-backed fixed income securities and back into risky assets. A look at the $SPXEW is proof that zero technical damage has been done to the broad market.
Clearly there are concerns with international markets…. but please, take a look at the McClellan Oscillator and the Put/Call ratio – then tell me with a straight face we're not due for any kind of mean reversion. It looks like the money that went into gold is going to look for a new home while it consolidates. Where do you think it's going to go? Ultra-bearish ETFs or buying equities on weakness to resume the cyclical bull?
Risk management is the name of the game.
