Rates Reverse to the Upside, Now What?

Mike Paulenoff MPtrader

While I don't understand the underlying upside drivers of the equity indices atop a 17% upmove since Nov 8, I have much more conviction about the bond market-- that it ended a 35-year bull market last July, and is in the budding stages of a new, generational bear market-- and a new bull market in YIELD (higher rates).

The fact that ProShares UltraShort 20+ Year Treasury (TBT) held right at its fault zone yesterday, in the vicinity of 38.50/20, and has turned up so violently this morning, tells me that the entire digestion pattern off of the Feb 15 high at 42.98 ended at yesterday's low of 38.45, and that TBT has spiked into a new upleg that points to 45-46.

It is with the foregoing in mind, that I enter an initial new long position into this mornings's strength, placing a stop beneath yesterday's low.

Author

Mike Paulenoff

MPtrader

Michael Paulenoff has been a student of and a participant in the world financial markets for the past 26 years, since his graduation from the Georgetown University School of Foreign Service in 1979.

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