Monday, August 25, 2008

Time to buy?


Well the dow goes up one week, and back the next, its been like this for months, however I see some big swing trading setups on the horizon.
I think the long term outlook on bonds yields going up is good. I also think the Dow could bounce 1000pts back to 12,500. The commodity energy trade is probably over now that we are headed into winter season (that's what common sense would think). I'm not sure if the FED is going to raise interest rates anytime soon now. With the Economy still weak, it is very likely they will keep rates unchanged for awhile until demand picks up in the housing market. We are entering the weakest period of the year for housing sales, so I'm sure there will be a lot of ugly headlines to come this fall regarding housing. I'm a strong believer Mortgage rates will be much higher this time next year as with interest rates, so my long term outlook is higher yields on bonds.

In order to magnify whats been going on in the markets, I've compared a chart of the 5yr bond (inverted and mirrored) vs. FXI (China stock ETF)


30yr

5yr
10yr
Dow

2 comments:

Banker on 4:45 PM said...

I actually started to leg (slowly) back into stocks yesterday. I think it can be choppy and we do not have to trade much higher, but averaging in at these levels looks like a longer term good play.

HPT on 7:39 PM said...

FXI is up about 5% this week already. Its gapped up twice around 2%. The fact that we are getting record low volume days right now makes me think now might be a good time to buy too, however, there may be more banks to fail which could cause some worries and volatility.

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