BONDAGE!!



Here we have the 30 yr T Bonds weekly chart. We are nearing one of the better seasonal dates to be long this market as indicated by the arrow furthest to the right on the chart. Our friends the commercials have not really been of much help recently in helping us call the swings ( red line in third graph ). What has been of good value is one of my custom versions of COT study. Notice with the 3 Gold lines how well these sharp changes forecast the next move well. Unfortunately, there is not a good indication right now via this indicator.



We have had some commercial selling net over the recent weeks and months, so that does support a potential sell here, but the daily shows up short term buy signals right here on this dip into the seasonal period. In this unique period where so many markets are inextricably linked in ways they have not historically been, it is imperative that we view things in relation to these other markets.



So in summary here is what I see. A panic rush to the metals, gold specifically by small investors, the big players selling with both hands there. A stock market in a very strong uptrend and even though I have been calling for a decline, no meaningful one has happened yet. We have the dollar getting pummeled. Energy prices relatively weak.



In deciphering this it seems we have somewhat of a decoupling of the energy tie to stock prices, which never made any sense to begin with, a good thing. Metals tied at the hip to stock prices, with the currencies right there with them, of course the dollar being there in an inverse fashion. Bonds are decoupling a little also, as they are stronger than what I would have thought considering how strong stocks have been.



Net net, where the stock market goes is going to determine the fate of many of these other markets so in my personal trading any position in any of these I treat as the same as the others. If short Silver for example, that is basically the same as shorting the stock market. Being long bonds is also like being short stocks. Long currencies would be equivalent to long stocks. As a result, take this into account when determining position sizes in trades. If you were to be long the Euro, Gold and the SP 500 and short Bonds at the same time, that really represents one position times 4 in risk. All those trades will likely work or fail together, so you would need to take 1/4 of the risk in each one to have the same overall risk.



This has rarely been the case in the past, but it has always been the case that you need to know what the correlated markets are and adjust your risk accordingly.



I am trying to get long bonds and short currencies today, and long the dollar. I always buy above the market and sell below it, so I need moves in the desired direction before entering. So far none of the orders are filled so we will see what transpires. I have adjusted the risk as per what I just explained. I hope to get a more clear read on the Bond market overall soon but in the abscence of a clear sell on the weekly, I am deferring the the seasonal buy zone for long entries.