I am scared of shorting this. The bond market has turned into a black hole, its sucking money away from all other markets: vs ES http://futuresource.quote.com/charts/charts.jsp?s=QUS&o=ES&a=D&z=800x550&d=medium&b=BAR&st= vs Crude http://futuresource.quote.com/charts/charts.jsp?s=QUS&o=CL&a=D&z=800x550&d=medium&b=BAR&st=
looking at the two charts.....the tops and bottoms both appear to be at the same levels....however, the rise of the bonds is parabolic...that angle cannot be sustained ad finitum, at some point, all the money that is going to get in, has already done so...
Am short the Bonds and 2,5,10 yr. Notes, Fed funds and Eurodollar from last week, still holding call options on much of it. This is second attempt on the Bonds which broke even on first try. Although am short, I believe late next year or early 2010, the Financials will go even higher.
Unless the FED wants the bonds prices to collapse, they won't I am not sure why you expect the price to drop. BB has anounced quat. easing. The Fed and The treasury are in complete control of the bond market. If nobody buys then they buy, and they can force the banks to buy. When the Japenese finally suspended their Quant Easing, they gave a heads up before the blood bath. I would assume the FED would do the same. This process will go on for at least the first 6 months of the year. The FED is trying to punish anyone who wants to put their money in T-Bills. Bond Prices will not ease until credit starts to flow. And since we are following the same crappy playbook as Japan but with even more incomptence. bond prices could go the moon while the country burns. Its a rigged game.
I just trade my system, I try not to add my beliefs on what fundamentals say or what my opinion may be. I learned the hard way in the past, my system has always made more profits than I can "Thinking." I have been trading basically same method since 1994, but it was not until 1998 that I decided I will not over-ride. And bottom line is what matters, not what I think. When you are doing back testing, your opinions never come into account.
Handle is so right... When I start thinking too much...i find myself in trouble. Therfore, the way i see it today, the bonds are going much higher...