Why has this market been so challenging for me? Well, for one thing a logical connection between the KBE/SPY ratio and yields broke recently as long-term yields rammed upward and this ratio rammed downward in November. Now yields are dropping and KBE/SPY (along with nominal KBE) is positive for the 3rd straight day as yields decline. Wacky.
How the hell is that supposed to be managed on a daily basis? Answer: it isn’t. I got rid of KRE on this bounce and now if I am going to play rising yields I am going to do it by being long yields and/or short bonds. Too many moving parts in what I thought was a well balanced portfolio. That is what this last couple of weeks has shown me.
Here is a closer view of the ratio.
And here is the 10yr yield, which should look like it and had looked like it until November rolled around.
Moral of the story? The macro/chart nerd got played by the market. It’s annoying, but it is what it is and I need to try to understand it better.
Subscribe to NFTRH Premium for an in-depth weekly market report, interim updates and NFTRH+ chart and trade ideas; or the free eLetter for an introduction to our work. You can also keep up to date with plenty of actionable public content at NFTRH.com by using the email form on the right sidebar. Or follow via Twitter @BiiwiiNFTRH, StockTwits or RSS. Also check out the quality market writers at Biiwii.com.