Cats & Dogs Strategies
Stock Markets & Bonds
10 Year (left) & 30 Year bond
March 6, 2010. Commercial players are slightly long the 10yr and considerably long the 30yr. The 30yr looks bearish based on indicators. The True Location, top indicator, is in bear mode; our version of Drunkard's Walk, 2nd indicator, is anti-trend but slightly bearish; our Directional Volatility, the third indicator down, is slightly bearish. And our spin on Bollinger Bands is neutral. The 10yr reads neutral, bullish, bullish and neutral, in the same order as the 30yr. If stocks are up next week, as we expect, the normal result would be bonds down. To generate a real bear market, or even a good bear phase, we suspect the Federal Reserve will have to announce that it is no longer feeling "accomodative," and that is not likely to happen before the third quarter, and may not happen until next year. On the other hand, it is hard to see how rates can go down from here, so borrow long, lend short.
2 Year Note
March 6, 2010 Like Superman, the 2year note has been "Up, Up and Away" since the middle of 2007. The commercial players are fearful that the party will end, as well one would expect. The trend following funds are showing signs of ameliorating their long holdings. Our own notion of "where next?", the second set of lines from the bottom, tells us that there is no strong sentiment on either side. If you don't have crop loans in place, we'd suggest waiting has more risk than reward possibilities.
Dow Industrials
March 5, 2010. A good week for the stock market, it was. Our gadgets think we will see more good weeks to come. 12,000 is virtually a "gimme" and 13,000 likely. Whether we get past, or significantly past 14,000 is unknowable. Fibonacci extensions, a tool of some technical analysts, suggest that the rally will poop out between 13,000 and 14,000. Sure would be nice to know where folks are going to find jobs that pay a living wage. McDonald's, WalMart and Starbucks aren't those jobs. Wheat farming has been a tough place to make money lately, too (farming has always been tough, but ...).