Tuesday, April 13, 2010

Market Update

Something in which I am thinking constantly is on the 10-year treasury notes yield. The ascent in the yield, is anticipating inflation, or economic rebound? I think that it is anticipating economic rebound. If you look at the gap between yields on the index-linked and conventional bonds, you will see that this narrow gap is not anticipating inflation.
In addition, sector rotation is holding the indexes. The past week it was energy stocks...before, financials. Let's see what happen with the earnings comings this week.
I think a correction is possible (or necessary) from this levels, but the rule have not changed: "buy the deeps" will be alive until the bears stops shorting all the corrections.
The VIX is something to worry for the bulls. It is making new lows, and looks like it is ready for a rebound. We know what happen when the VIX wakes-up in bad mood.

But, on the other hand, the Dow Jones Transports has confirmed the new highs in the rest of the indexes:

The euro looks like it is ready for a rebound. Look at the EURO/USD monthly chart:

FXE daily chart:

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