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Our end-of-world date came a few days later than preacher
Harold Camping’s, but it
looks like we were both wrong.
Unlike Camping, we were not so much
concerned with the wrath of God — which, one fervently hopes, has been amply vented by the spectacular
irruption of natural disasters
visited upon the planet and humankind lately. Rather, our chief worry
concerned the potential
top that we saw forming in the 10-Year
T-Note. Not exactly the Rapture,
let alone Judgment Day,
but perhaps troublesome enough to set the world’s
financial system on course for its
own day of reckoning. For if prices for Treasury paper are indeed topping, and yields therefore bottoming, then scores of
millions of debtors are about to be squeezed to the brink of insolvency.
 
Perhaps we needn’t
have worried. Yesterday,
the June 10-Year T-Note futures finally
hit the 123^21 rally target
we’d proffered weeks ago by way of a Rick’s
Picks trading
“tout.” Then, in apparent defiance of natural law and the black artfulness of
our proprietary Hidden Pivot analysis, they continued higher. Not much higher, to be sure, but higher enuf to suggest that the preference of buyers for
“safety” over risk
is unlikely to abate over the near term.
Bailing Out of Short
Well in advance of this
by-now fabulous surge in Ten-Year paper, we’d told subscribers to get short at the projected top, but with a very tight stop-loss of five ticks. We reiterated this cautionary note in the
chat room yesterday after
a phone conversation we had with our
friend Doug B, an occasional
contributor to this site.
Doug mentioned that the
good folks who brought us
QE1 and QE2 were contemplating
something a little different for QE3 – i.e., a 1950s- style targeting of rates on the 10-Year Note. Presumably, this would be instead
of trying to mop up growing quantities of debt elsewhere along the yield curve, or of trying to push administered rates lower than…zero.
It’s hard to predict what
a further surge in the
10-Year Note will mean
for the fragile ecology of the financial
world, but it would seem to augur further delay in the collapse
of The System. A drift in yields down to 2.5%
or so also suggests that investors think QE3 will be as big
a bust as QE2 where resuscitating the economy is concerned. Whatever the case, we bailed out of our short-lived short in T-Notes five painless
ticks above the entry price. Putting aside the Fed’s rumored intention
of stabilizing the 10-Year above
all, we remain bearish on the dollar. Yes, it has been sold almost to death and deserves a dead-cat bounce every now and then. But merely because “everyone” hates the
dollar is not sufficient reason to believe it cannot continue lower. Meanwhile, if the
best argument dollar bulls can make
depends on weakness in
the euro, or in a flight to supposed “safety,” then we’ll continue to hoot the
bulls from the sidelines.
Rick Ackerman
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Information and
commentary contained herein comes from sources believed to be reliable, but
this cannot be guaranteed. Past performance should not be construed as an
indicator of future results, so let the buyer beware. There is a substantial
risk of loss in futures and option trading, and even experts can, and
sometimes do, lose their proverbial shirts. Rick's Picks does not provide investment advice to
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purchase or sale of any security or investment. From time to time, its editor
may hold positions in issues referred to in this service, and he may alter or
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Contents © 2011, Rick Ackerman.
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