October 6, 2016
Short Treasury Bonds
As written many times here, either it’s just fear mongering or outright ignorance, but the brokerage industry has been preaching “Sell! Don’t Buy Stocks”, since the beginning of 2016. As a function of all that negative hype, several major events this year have produced TEMPORARY sell offs in our stock market…and at the same time produced hefty “flight to safety” rallies in two principal areas, those being Precious Metals (Gold & Silver) and Interest Rate instruments (Treasury Bonds & Eurodollars) as investors sought a “safe haven” for their capital...And those two events, specifically being the January collapse in Chinese stocks, and then the Brexit nonsense, according your Wall Street amigos, were supposed to slam the world economy to its knees...and therefore also crush the stock markets…neither of which even remotely came close to happening.
The end result is that all that safe haven buying DID occur…and did so in such uniform fashion that Gold, Treasury Bonds and Eurodollars have had virtually identical price movement since January, such that their charts are almost indistinguishable from each other…
See for yourself…
Now put what you see above together with the following chart (from my 9/27 newsletter) demonstrating that Stocks have been trading dead opposite Eurodollars (AND, therefore, Gold and Bonds) for the past year…
One - Gold, Bonds and Eurodollars have been trading…in perfect unison….opposite the Stock Market for all of this year…and I firmly expect to see that continue…
Two- As also repeatedly stated here, I think this Economy and the Stock Market are in the process of lifting off to the upside. And Gold, Bonds and Eurodollars will do exactly the opposite.
Three – All three markets in this Safe Haven Trio appear to be rolling over to the downside…for the moment being led by Gold which has dropped about $65 this week…All three markets have, in my technical opinion, met all of the criteria for what generally defines a commodity market top…and all three now appear to have reached the stage where a direct acceleration can be expected towards sharply lower prices (again, my opinion).
Four – I think it is highly unlikely that the price action in all three markets, beginning to collapse lower, is nothing but a head fake…That all three of these markets are about to reverse and head back higher again…I think what you see here is beginning of THE END of all the “weakening economy” malarkey that Wall Street and multitudinous talking yakhead sheep have been spewing all year…I THINK YOU ARE ABOUT TO SEE THE STOCK MARKET MAKING FAIRLY ERUPTING TOWARDS THE UPSIDE…WHILE THESE THREE MARKETS BASICALLY GET CLOBBERED.
I CONTINUE TO RECOMMEND BEING SHORT GOLD (see my Aug 23rd newsletter http://www.crokerrhyne.com/newsletters/08-23-16.htm ), SHORT TREASURY BONDS AND SHORT EURODOLLARS.
And never forget that prices move due to players getting IN…and getting OUT of the markets….
As I wrote in August, I think the downside target, to begin with, is UNDER the $1000 mark…then probably sideways to nowhere for years…
Bonds have rattled, and rattled and rattled around for months…They DO now look to have completed their topping process.
And Eurodollars one more time…
Employment numbers out at 8:30 AM tomorrow…We’ll see where this takes the market thereafter…
This idea has more than 9 months to work…and I think that all of the action you see above since February IS nothing but a top formation that IS about to break loose on the downside…If you’ve been thinking, “This makes sense. I ought to do some”, I urge you to get on with doing it.
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