Stock market bulls are getting dope hammered and that may be just what the contrary bullish * Treasury bond market needs.
Here we reside, above the Continuum’s ™ limiter. Everybody run for your lives! The world is ending I tell you!!
Except that calmer players will recall that these in-month events can be filled with fury and drama, and then in the span of said month, simply reverse to once again whipsaw the herd.
Here is the sentiment setup (as presented in NFTRH 520 last weekend) on the 30yr bond whose yield is shown above. It’s pinned to the floor and it can’t go any lower. The public… you really want to be on their side with conviction? From Sentimentrader:
Commercial Hedgers are very convicted the other way, positioned very net long the long bond.
We looked at this from several angles in #520 and one of the options noted was as follows. Sure, there are others, but this one would play out if the contrary sentiment issue proves valid.
“The extreme sentiment setup noted above manifests in yet another whipsaw and disappointment for bond bears (opposite to the last extreme – 2016’s NIRP hysteria – which was a bull trap we anticipated well in advance). Bear traps were most recently in play during 2013’s “Great Promotion Rotation” and 2011’s inflation hysteria blowout featuring Bill Gross, the “Bond King” and his famous and ill-fated short on the long bond. In other words, the Continuum is not broken until at least a monthly close above the limiting moving average.”
So the Continuum above is breaking out in-month. Maybe this time it’ll be different. I don’t control the markets; I just read their signals. But then again, maybe this time it won’t be different. After all, where might all that formerly stock bull-convicted money go if the stock market does not stop soiling itself? Gold? Why not? The traditional risk ‘off’ sanctuary, Treasury bonds? Well, everybody knows they are bearish and folks, that’s the point. All I’d ask is that we give it some time before sounding the BOND BEAR!!! alarm.
* All due note here that a contrarian setup can take a long while to get going, if it gets going at all. If the Continuum’s limiter breaks and holds into November I will take it more seriously.