Bond Fireworks, Dead Ahead

With the highest level of short positions in bond history, it’s reversing.

Short sellers have been hypnotized after six months of non-stop downward action … sometimes the reversal begins quietly.

The clues are there. Bullish MACD in both histogram and the lines. The price action trap-gap.

The purple oval has been expanded to the left showing the ‘trap-gap’. This type of action is common during a surprise reversal.

The problem is, it’s all connected. Bonds rising indicate the economy is weak. Actually, the economy is dead (by design).

Just take a look at one of Jeremia Babe’s walk-around updates.

Businesses and malls are ‘decimated’ in his words. Here’s the latest from him … just out.

The TLT and HYG (junk bond) both reached their extremes on the same day but in opposite directions.

TLT reached its low and HYG reached its high.

Now, both those markets have reversed. The latest CPI numbers were a surprise. It highlighted that hyperinflation is not there.

That article also pointed out, rent inflation (i.e. commercial real estate) is decreasing.

One last thing. The broker used by the firm has posted a message each day upon logging onto the trade platform. That message is to the effect:

‘As a result of increased market activity, we’re experiencing especially high call volume and hold times’

This message is being posted when the market is going up!

Are any of the major brokers going to effectively handle the herd of retail calling in a panic, trying get out of a downside trading halt?

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

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