Thinking about this for the 26th: 1) Treasuries up on equities fear. 2) Oil up to 140. 3) Equities seem in a capitulative mood (note I'm not calling a bottom ... just that the negativity is running extremely high). 4) VIX still low. The best conclusion I can come up as a responsive trade going into next week is to buy some 10 yr treasury ZN puts. My logic is this: 1) with futures edging up and lack of substantial data tommorow, will the yield fear trade have enough juice to continue if oil keeps up with its technical ascent? I say no. The inflationary tendencies are impossible to ignore, and yields either break OR -crude- breaks. Selling pressure on ZN. 2) If crude fails the 140 line and recedes on Thursday's EIA' bearish fundamentals rather than Libya talk-up (its pulling back right now), the market rallies and the fear trade (long treasuries) is off too. ZN down. 3) I am wrong if the S&P market crashes tommorow - but when in the world does the market crash when everyone is expecting it? The negativity was extreme. I read this and it turned me off from being bearish stocks: http://blogs.wsj.com/marketbeat/ (being such the contrarian I tend to be) 4) We'll see about follow thru, but VIX is not being aggressively bid. I think the equities is much less levered than earlier in the year and that explains this. Everyone and their mother is already short. So buying ZN puts is a proxy to getting long the equities market, but has potential even if the market falls lower as today's fear recedes. Oil continuing the ascent is good for bond shorts on a long term historical precedent (yields in the Volcker days serve as example), and oil falling is good for bond shorts on a recent market behavior precedent. It just makes sense. I like short bonds here and am not interested in my earlier in the year long bond bias anymore as we are already so far into the this 'crisis'. Any thoughts?