Wednesday, October 15, 2014

Danger, Danger! High Voltage!

When I was a younger man, I was backpacking my way through Malta and I managed to coachsurf in a fantastic place with great hosts. I will always remember one of my hosts, he showed me this ridiculous video while we were totally drunk, guzzling litres of cheap wine.

The point of this video is this that, danger danger, high voltage!

As much as the markets have corrected quite nicely and seem oversold, it is possible to stay oversold for a while. Just like how we have been overbought for the better part of the last 2 years.

Treasury yields are signalling bright red warning signals. As I have highlighted before, the bond market is MUCH larger than the stock market, so perhaps this might be a good time to heed it? What happened to the higher bond yields that every mother, son, grandmother had been predicting? Bob's rule #9: When all experts and forecasts agree, something else is going to happen. And it did. 10 year treasuries under 2%? Wow, who could've seen that coming? (my bond positions are up 3.87%)

However, the biggest risk that I see isn't a market plunge. Au contraire. The biggest risk that I see is instead a massive, swift V-shaped rally up, killing off all the late short-comers (pun, hurhur). Personally, I think any rallies should be shorted, but hey, don't listen to me, do what you want to do. I will do what I want to do. I am going to be continue being skeptical of rallies. (I added more shorts to my Russell trade yesterday)

Stay nimble traders, seems volatility is creeping back into the markets! Long-term investors? Continue watching from the sidelines. I'm sure the bloodbath is much more entertaining when you don't get any blood on yourself.

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