We have had a substantial move down in the bond market this week. As you can see, we have broken through the 2.0 standard deviation bands (the blue lines). There is really no magic to these lines, other than they tell us when a short term move has traveled more than a normal amount. I have covered this in past newsletters.
However, it is still a nice visual aid to help with a larger picture perspective on things. I suppose the more positive than expected economic news is the explanation for this move, but I could care less. You could also argue that the rise in gold, was the primary cause.
With the primary seasonal tendency for a decline at this time of the year, combined with the well defined downtrend in prices, we should be looking to sell rallies against the trend. Buying oversold conditions for reversions is another strategy that can be employed, but it is not for the faint of heart. My short term system will do that in the trading service, but I do not suggest that the average person do this. Staying in sync with the primary trend of the markets, is where most of the money is made.