Eye on Interest Rates

Discussion in 'Technical Analysis' started by qdog, Aug 31, 2005.

  1. qdog


    Watch the 30 year T-Bond yield in conjunction with the Dow Jones Utilities index.

    The long bond yield appears to be on its way to test the June low.

    The Dow Jones Utilities index which is often a harbinger of changes in long term interest rates closed at a new high today. The new high came with a diverging 14 day RSI. I am betting that the Dow-15 is making a top and the T-Bond yield will hold above its June low.



  2. Yes, but don't you have the relationship backwards? High utilities translates to lower yields. Seems to suggest that yields are going still lower.

  3. Ebo


    Mr. Harbinger

    The charts are colorful but you have no clue!
  4. qdog


    The Utility index making a new high that is not confirmed by the 14 day RSI implies a high probability of a reversal.

    You are correct that if the utilities continue higher that does translate into higher yields.

    I am conjecturing that we are watching a top being made in the Dow-15.

  5. BlueHorseshoe: High utilities translates to lower yields

    qdog: You are correct that if the utilities continue higher that does translate into higher yields.

    Somebody is wrong here....

  6. qdog



    Utilities go up, yield goes down. I typed to fast.

    Thanks for the correction.

  7. Babak


    James, on a bit of a digression...I noticed you're short GOOG with a large unrealized loss. Do you usually let positions go against you like that? When, if at all, do you say enough?

  8. qdog


    Very frequently, I do. Also, I don't hide my bad trades.
    Q&T is down about 8% for the year and that is almost totally due to the short portfolio.
    I would not do this if I shorted an index or even just one stock.
    Google (GOOG) is one of a basket full of shorts. When I short a stock its for a good reason and I usually give the positon plenty of time to work its way out. In hindsight, shorting Google (GOOG) at $180.00 looks ridiculous. When a stock is hyped as much as Google, I really have no idea when it is going to break. I just have confidence that it will. In my opinion, as I have said all along, Google is a $5.00 stock.

    One of the reasons I don't manage money for others outside of Q&T is that my approach is totally terrifying. At one time I actually had a bigger loss in BEBE Stores than I did in GOOGLE.
    Look at what happened to BEBE today, below. It has been a rough quarter.


  9. Babak


    I think I understand. You go by fundamental much more than technical rationales and you don't use any real money management rules (stop loss, etc.).
  10. qdog


    I don't look at fundamentals as much as you might think.
    IMO the stock market is mostly luck, good and bad. Technical analysis does not (also IMO) give people the margin of certainty that they believe that it does. What it can do (also IMO) is point to situations and configurations where the odds are briefly in an investors favor. There is absolutely no certainty in anything any of us does. Most of it is self delusion. TA just gives me a slight edge so that I come out ahead on balance.

    With stocks like GOOG, I don't study fundamentals but do follow the sequence of hype. I am a great believer in efficient market theory. Without news coverage, or analysts recommendations, a any stock is more likely than not to be trading at a realistic price.
    Publicity such as what surrounds GOOG is what causes the price to increase. If GOOG had not been hyped so much I may have taken a small loss and let it go. But as far as studying fundamentals is concerned, I don't have the mental capacity to learn enough about enough companies to make much difference. What I do in addition to TA is watch other people.

    #10     Sep 1, 2005