Frightened by the proximity of the trendline prices rebounded — even with fake tweets bombing the market for 4 minutes. WE now have three days of strong rebound. The pattern is somewhat difficult to understand. It might be an Alpha-beta-gamma (http://www.edwards-magee.com/?p=3776 http://www.edwards-magee.com/?p=3803) (Previous letters explaining Alpha-beta… pattern.) On the assumption it might be we lifted part of our hedge. Readers who sat patiently and watched the squirrels wound up winning the nuts –assuming we take out the last high.
We like being short the bonds. One day it’s going to pay off big — sometime in 2016. So note, without a signal, we shorted the TLT with TBT. A small first unit.
We occasionally talk about the no-signal trade. This is one of those. We look at it and say it looks like the wave has crested and the risk is limited — put a stop 1% over the recent high and hop on off to do something else — like short the euro.
The uptrend line (last) is not really a good line — of marginal theoretical validity, but once again it is a low risk trade –stop two percent over the high. And given the Europeans ham-handed approach to their economy (really, starving their economy with austerity — a diet of air for a starving wounded animal… You’d think they learned nothing from Keynes — or you’d be certain they learned nothing..an example of stupidity that our own Congress is trying to repeat.) God (or Allah) preserve us from fools and ignoramuses.