The ETF Report Commentary for February 4, 2011

The ETF Report       
Lawrence Sarsoun                                                       
321-259-4729
sarsoun@hotmail.com                              
Melbourne, Florida

Special Report. One of the unfortunate problems we have noted in our assaying of economic conditions and trends is the problem is seeing things ahead, before their time. Put another way, I often shoot myself in the foot by getting into the game too early. So, take my words with a grain of salt, put this report in your chest of drawers, and maybe come by once in awhile, and see if events are coming to pass as recorded.

As those who are regular readers know, I watch closely the 30 year Treasury yield. Today it is 4.72%, up from starting the day at 4.69%, having started yesterday at 4.62. I am getting the impression that things are starting to accelerate. Then, the folks on the TV are reminding us of the flash crash, which they say will evolve into the Splash Crash (I called it “The Limit-Down Crash” from my days on the floor of the CME). Actually, it sounds like the Revenge of the Machines. At any rate, we put 2 + 2 together, and synergistically, we see all h*** breaking loose. With this threat of an economic trading sunami, we have to wonder how anybody would be silly enough to stand in front of the train (how do you like mixing those metaphors?).

 So in keeping with all the wagering about the Super Bowl, we wish to announce the “Tipping Point” poll. The question we pose and invite you to ponder with us is, at what level of the 30 year yield do you expect the stock market to swoon and go bye-bye? Oops, it just ticked 4.73%.

 We are bullish all the inverse and have positions in TWM, SJH, UNG, UDN, QID, DOG, SKK, DOW, PSQ, TBT, SPXU, CYB, EWS, and SLV.