“I’m forever blowing bubbles,
Pretty bubbles in the air,
They fly so high, nearly reach the sky,
Then like my dreams they fade and die.
Fortune’s always hiding,
I’ve looked everywhere,
I’m forever blowing bubbles,
Pretty bubbles in the air.”
Gold, Treasuries, Junk Bonds, Netflix (we shorted them yesteraday), PCLN (we shorted them Monday), Credit Default Swaps – take your pick of what is going to be the next bubble to burst.
We shorted TLT again yesterday ($105) as I sure wouldn’t lend the US money at those rates and neither, it seems, will the “smart money” guys anymore as the cost to hedge against losses on U.S. government debt rose to the most in six weeks as investors bet the Federal Reserve will put more cash into the economy. Credit-default swaps on U.S. Treasuries climbed 1.7 basis points, the biggest increase in more than three weeks, to 49.4, according to data provider CMA. The Fed said Tuesday that slowing inflation and sluggish growth may require further action. The statement positioned the central bank to expand its near-record $2.3 trillion balance sheet as soon as their November meeting – just in time for a Santa Clause boost for the markets.
So why does this not make us bullish? Well, as I said to Members on Tuesday, it was an anticipated statement with no immediate action and we’re at the top of a 10% run for September so, as I said in yesterday’s post, we anticipate a pullback of 2%, back to our 4% line (see post). Also in yesterday’s post, I mentioned our IWM 9/30 $67 puts ($1.10) and the DIA Oct $105 puts (.89) both of which were good for a reload on yesterday’s silly spike, where I said to Members in the 9:56 Alert:
I like the same IWM and DIA puts as yesterday as we test 10,800 on the Dow – I don’t think it’s going to last. Tomorrow we lose the usual 450,000 jobs for the week and we have Existing Home Sales at 10, which can now disappoinit as Building Permits were a big upside surprise yesterday. We also get Leading Economic Indicators at 10 but they are expected up just 0.1% and I doubt they go negative. Friday we have Durable Goods, which should be down 2% and New Home Sales at 10, also now set up to disappoint even the very low 291,000 expected. So caution, caution, caution PLEASE!
I had already mentioned in the morning post that “bear is the word” and this is where the free…
