CURRENT POSITIONS (AS OF 01/10/00)
Â Â Enter
Â Â Stop
The March bond
pulled back Monday after Fridayâ€™s gains, giving us the pullback we were looking for. The market came under pressure from a higher stock market again today. This negative correlation has been going on for a while now and I donâ€™t see any end to it
I established a long position at the 90-16 area with a stop at the
89-16 area and a profit target at the 91-25 area. We have PPI and CPI coming out
this week, which could give us the catalyst for the next upmove in the market.
If we look at the Fed Fund futures, we can see that the market isn’t as sure
about another rate hike as it was early last week, This could give us the
beginning of the rally we are looking for.
(bond) market came under pressure from a higher stock market again
under some pressure today on the higher US stock market. I am still waiting for more of a pullback before establishing a long position but expect it very soon. As with the bonds, there is a negative correlation going on here with the stock market. It would be nice to be able to trade on this alone and sometimes it is very tempting to do so, but the problem is that the correlation factor comes and goes. What I look for instead is a confluence of factors to increase the probabilities of being right. In this case I am looking at momentum,
retracements, as well as correlation factors.
March S&Ps (SPH0)
got a boost today on the AOL-Time Warner merger, the biggest in history. This was viewed as a vote of confidence by AOL on the future of e-commerce and thus the economy.Â
Technically, the market has continued to be strong, blowing past the 1443 area. I am getting somewhat bearish again but did not establish a short position as I did not see enough of an â€œedgeâ€
my Jan. 7 commentary) to warrant the trade. The VIX continues to trend lower after Fridayâ€™s big drop, which makes me somewhat bearish.
big drop signifies bullishness in the market coming back very suddenly. Historically, such rapid moves can be faded with a decent probability of making money. Stay tuned.