Get Ready for a Euro Rally. Or Don't ... and I'll Get Ready for You

The US dollar has had a torrid rally. But my charts suggest a correction is due.

Maybe that is what this latest bout of currency-market volatility is telling us.

Volatility is often a precursor to a change in trend (in all time frames). We know dollar sentiment is overwhelmingly bullish – it seems a one-way bet right now. But Mr. Market is watching because he loves one-way bets. 

I'm not betting big on a correction right at the moment.  But I have told my subscribers to get ready. Today’s price action plus sentiment data suggest a speculative extreme may be near. 

Sentiment extremes suggest a turning point is imminent. Be careful, all you euro bears!

I watch open interest levels in the currency futures market. It is a good longer-term measure of sentiment. Often times, open interest reaches an extreme just ahead of a trend change. Below is a currency futures chart for the euro. The open interest level is huge and sentiment for the euro is extremely bearish: 

The red circles denote peaks in open interest that corresponded with key lows in the price of the euro. Given the extreme levels, I think euro bears should be very careful.

I am monitoring the major pairs closely.  Because if a correction lower in the dollar does materialize at these levels, it would likely be at a least multi-day, and probably a multi-week, event -- in other words, something playable. 

Analysis like this is one way I  keep my subscribers prepared. Until recently, it's been up to them to follow along and follow through.

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Thank you. And be careful out there.



Really ... A Real Recovery Redux?

Since 2009 we've put forth a very important idea every time the consensus began to believe a real US economic recovery would take hold.

Actually, two ideas ...

First, we figured there was always too much deflationary pressure for a real, sustainable recovery to take hold.

Second, assuming we were wrong about the first idea, we feared what a recovery would mean for the US stock market. 

We cannot stress enough that market prices are driven by sentiment, human nature. Improving sentiment for the real economy has the potential to undermine the market.

Let me explain ...

I met a friend at a coffee shop on Friday. (In case you were wondering, I'm one of the few remaining hold outs in this cultural piece de resistance -- I do not drink coffee. So I drank some fancy chai thing. I think it's some kind of tea.) He's in the market to buy a house. And I also know some guys who are in the market to sell a house.

So we discussed how new home-buyers may be coming into the market now. There are two reasons for this (besides the typical "buy low" mentality):

1) Many past short-sellers are now eligible to get a mortgage again.

2) Buyers may be looking to seize the opportunity to lock in low interest rates.

The latter point is critical. Keep it in mind ...

Also on Friday I was passed along an article by David Malpass writing in the Wall Street Journal:

The Fed's Tapering is Already Paying Off

Malpass argues the Fed's tapering is already making room for lending to be made to individuals and small businesses. He also argues this trend will actually, finally, create jobs and drive real economic growth. 

There was one very brief mention of how Fed policy has effectively driven capital to the "Haves" at the expense of the "Have-nots." In other words: the rich get richer. (I'll say no more about income gap dynamics so I can avoid contracting a case of the Mondays.)

But let me take Malpass's article to its logical conclusion for the stock market ...

If the Fed is believed to continue tapering and completely end its bond-buying program in a few quarters, then soon thereafter they'll probably be inclined to remove their very visible hand from atop the Fed Funds Rate.

Any signal to that effect will allow interest rates to rise. That's not to say they will, but the odds are greater that they will rise once the Fed assumes a lesser role in manipulating the cost of money.

Yet well before the Fed changes its low interest rate policy, investors are likely to react. 

Along with hints of economic recovery, the expectations for rising interest rates will drive the demand for lending. Small business and individuals looking to pump money into real economy investments will be looking to grab loans at near-historically low interest rates.

So ... kinda sounds like gravy on a biscuit -- it's all good, right?

Not so fast.

Part of the "rich get richer" dynamic that's been emboldened by the Fed's extraordinary monetary policy has been the rise in asset prices. Considering that in said monetary environment the money was flowing into banks and financial institutions while much of the rest of the country remained mired in mediocrity, the eventual destination for most Fed liquidity was not the real economy but, rather, the stock market.

Now consider the levels at which major US averages are now trading -- historic highs, more or less.

Indeed, there are a lot of bears out there who can't justify these levels. (That, from a contrarian's point of view, however, does suggest the market can still press a bit higher in the near-term.) As the opportunity for out-sized gains in the stock market diminishes, capital will seek other sources of return.

A source of return that has long been absent is investment in the real economy.

It may seem like improving economic fundamentals are a plus for the stock market too. But for now we've got to look at it in the context of capital flows, I think.

The Fed has created an environment where investors are addicted to capital flowing between asset markets. The Fed's departure (and consequent expectations for a rising economy and rising interest rates) could open the door for a reversal in these capital flows.

Certainly the Fed is going to do their best balancing act to avert any significant drop in market capitalization lest their "wealth effect" efforts be thwarted.

But I think there will come a point when the market is going to run out of buyers willing to buy high and hope for higher.

Maybe the reaction to Wednesday's FOMC meeting will offer some clues ...

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Fed up. In Italy ...

The Federal Reserve is up to bat again today. And it seems the bets on tapering are rising with each passing moment.

Let's just say I'd be surprised if they announce tapering today. I have several reasons why, but let's just say the state of things in Italy is on the Fed's radar screen.

As it pertains to tapering expecatations, we've provided thorough details and analysis in recent issues of Global Investor (for paid members only.) But let me summarize a few pieces with broad strokes:



  • Inflation is not pressuring the Fed to change policy
  • Potential adverse global market reaction to a perceived change in rates is pressuring the Fed to sit tight
  • Further, tapering could counteract the influence of Japan's Abenomics which accomodates a renewed yen-carry trade
  • The adoption of the Volcker Rule creates new uncertainty in the US financial system
  • The fragility of the European financial system has become heavily dependent on Fed activity



I think most of those items are self-explanatory. But let me update you on the latter ...

If you don't regularly read Ambrose Evans Pritchard in The Telegraph, you should. He's very thoughtful and very critical. And his focus tends to be on the Eurozone. (Note: As good as Pritchard is, try not to let his analysis dictate your trade timing. It doesn't work even when it sometimes feels like it must!)

Anyway, he had a piece published yesterday: Italy’s president fears violent insurrection in 2014 but offers no remedy

And here is the crux of his piece, questioning why Italy is in the crummy predicament to which its President admits:

Now why might that be? Might it not have something to do with the central overriding fact that Italy has a currency overvalued by 20pc or more within EMU: that it is trapped in a 1930s fixed-exchange system run a 1930s central bank that is standing idly by (for political reasons) as M3 growth stalls, credit contracts, and deflation looms?

And later he goes on to say:

To those who keep insisting that Italy should tighten its belt and claw back competitiveness by cutting wages, I would contend that this is mathematically impossible in a climate of EMU-wide deflation or near deflation.

The reason should be obvious to everybody by now. You cannot allow the nominal debt stock to rise on a shrinking nominal base. Such a policy causes the debt trajectory to spiral upwards. Italy’s debt has already jumped from 119pc to 133pc of GDP in the last three years in large part because of the fiscal austerity policies.

Yeah, it should be obvious. But that doesn't mean it won't continue to be ignored ... by Germany.

One may be inclined to think the Eurozone is on the mend just like the US, just behind the curve a little bit. We hear all kinds of things about how valuations in Europe are attractive. But I'd argue that assumes a lot for the Eurozone's growth future. I think "attractive" valuations are also relative, i.e. how European markets stack up to US markets. (Doug Kass recently stated he thinks US markets are 8 to 10 percent OVERvalued.)

The biggest threat to Europe-on-the-mend is political and social discontent.

Germany this week launches its grand coalition, a deal between parties on which direction to take German policy. And it's not been met with kind words. From The Telegraph:

“The agreement does not contain anything that would solve the European debt crisis, re-ignite growth in the euro periphery, or dampen the disastrous impact of austerity,” said Sebastian Dullien from the European Council on Foreign Relations in Berlin.

Prof Dullien said it had blocked a viable EU banking union and left in place the “toxic vicious cycle” between weak banks and weak sovereign states, each at risk of pulling the other down.

Geez. What more is there to say?

Alright, since you praise my every utterance, I'll explain what this means in my own words:

Germany will not be making any changes that meaningfully impact the Eurozone dilemma in a positive way.

And guess who isn't going to like that? Perhaps the rest of the eurozone, maybe? From an older Pritchard article:

... the new plan of Romano Prodi, Italy’s former premier and “Mr Euro”. He is now calling for Italy, Spain, and France to band together rather than deluding themselves that they can go it alone, and to “bang their fists on the table”.

Nobel economist Joe Stiglitz echoes the theme at Project Syndicate. “If Germany and others are not willing to do what it takes – if there is not enough solidarity to make the politics work – then the euro may have to be abandoned for the sake of salvaging the European project,” he said.

Frankly, nothing is going to get done in Europe anytime soon. 

The best they can hope for is a perpetually effective perceptions management campaign led by the European Central Bank's own Mario Draghi. His strategy (similar to most policymakers of the last few years) is to air some of the eurozone's dirty laundry (namely, vague concerns for Eurozone growth) so markets feel like they're in the know.

But regardless of the "disclosures", if the markets get blind-sided by what's really preventing progress in the eurozone economy, they'll get spooked quickly.

And one more blurb from a different Prtichard piece:

“Every 10pc rise in the euro costs France 150,000 jobs,"said Montebourg. "Britain, the US, Japan, all have a strategy of monetary stimulus, but in the EU we have nothing but hard money and hard budgets. The currency doesn’t belong to bankers, and it doesn’t belong to Germany, it belongs to all members of the eurozone, and we have something to say about this,”

Is that a threat to invoke Article 219 of the Lisbon Treaty giving EMU ministers the final say over the exchange rate, a power that lets them dictate monetary policy by the back-door, provided the Commission plays ball?

A Deutsche Bank study said the euro “pain threshold” for Germany is $1.79 to the dollar. It is $1.24 for France, and $1.17 for Italy, a staggering difference. The euro ended last week at $1.35. This means Germany is sitting pretty, and it is Berlin that dominates the policy machinery.

Yes, indeed -- the US has a strategy of monetary stimulus. And the arbiter of that stimulus is very mindful of the situation in Europe and its potential contagion effects if Fed tapering sparks a rethink in markets.

Tapering rhetoric shocked markets when first broached in May. At most the Fed will test out the rhetoric again today so that they may see how markets react. But ultimately they are stuck because they've generated a global "wealth effect" dependent upon monetary stimulus.

-JR Crooks


December: History versus Taper

It's that jolly time of year again.

The bears are in hibernation and the bulls are getting fat. I've been seeing reminders here and there: Decembers are good for the market, don't you know?

Very well. Without pretending I did the research, let me steer you to Variant Perception for some stats to back up the December-to-remember claims.

The moral of the story: Buy today and come back once your New Year's hangover wears off.

If, however, you're monitoring potential reasons the consensus will get caught in a long-winter's nap, you don't have to look much further than taper talk.

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In every December on record till now, the market has not had to deal with "tapering." To be sure, I am confident the Fed is NOT going to taper in December. And though a lot can happen in three months, I'd be willing to bet they don't taper in March either.

But guess what? What I think generally doesn't matter to the consensus.

What matters is how the crowd wrestles with this idea. Let's assume incoming data remains positive. Belief that the Federal Reserve tapering decision is data dependent will go a long way into feeding tapering expectations. Further, belief the Federal Reserve is dependent on growth and unemployment levels will be the primary catalyst should tapering concerns flare up.

This isn't to say the December exclamation point on this year's rally will be denied. December may turn into another positive data point. After all, though the charts of major US equity averages appear extended, they still look quite strong.

But it is to say be careful not to become complacent. If too many find comfort in the history of December, the market will become vulnerable. Just because there's egg nog to fall back on, doesn't mean the jolly souls won't freak out if they think the punch bowl is going to get taken away.

S&P 500 futures are at record highs, but momentum isn't confirming the move:


Can someone please pass the punch?

And then can someone explain what it would mean for stocks if bond prices are propelled higher here?

-JR Crooks 


Reason #1: An ENDING expanding diagonal in the Dow

There is a lifecycle of a trend. And breaking it down into five stages might look something like this:

Stage 1: Accumulation
Stage 2: Denial
Stage 3: Conviction
Stage 4: Doubt
Stage 5: Overshoot

Using the S&P 500, I think we may be nearing Stage 4: Doubt ...

A trend's lifecycle certinly doesn't have to break down into five nice, neat stages. But based on what we've seen from this trend since 2009, it appears as though we're nearing the start of Stage 4: Doubt. (I've drawn in an alternate scenario in red that suggests what coming action would look like if we're actually already in Stage 5: Overshoot. But that doesn't appear as likely at this point.)

But is there anything else to suggest Stage 3: Conviction is coming to an end?

Yes. I would argue there is a litany of reasons. In fact, we're preparing this long list of reasons for members of our Global Investor trading newsletter. And it will be published later today. If you're interested in staying plugged in to what's driving markets, and if you're interested in explicit ETF trading ideas, then I suggest you snag yourself an early Christmas present.

Anyway, the reasons span from deflation in Europe to contrarian signals in key sentiment guages. But because I'm a nice guy, I'll give you reason #1 right now ...

Reason #1: An ENDING expanding diagonal showing up on Dow Industrials

The trend described above is going on five years running. And as I said, the lifecycle of a trend doesn't always breakdown into five tidy stages. So let's zoom in a bit for confirmation that the technical setup may be turning bearish for US equity averages.

I point you to the Dow Industrials:

A review of Elliott Wave Principle by Frost & Prechter reminded me of diagonals, particularly ending expanding diagonals. That's what I've drawn in on the chart above. It suggests the Dow has exhausted its upside and is due for a significant retracement.


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That's all for now.

If you want the rest of the reasons we're nearing Stage 4: Doubt, then I encourage you to have your mind blown with a Global Investor subscription. [And don't forget: ClearPoint can easily and efficiently execute any of our trading newsletters.]

Have a great weekend.

-JR Crooks


Eurozone economy will "turn the corner" ... to a new LTRO?

And the headlines read:

Sharp euro zone inflation drop, record joblessness add to ECB conundrum (Reuters)

EU sees 'hope' but also lower growth (BBC)

Euro zone economy turns corner, but growth, inflation subdued: EU executive (Reuters)

Well, the downward revision of growth from 1.2% to 1.1% is certainly not jaw-dropping. But is it enough to spark a subtle shift in sentiment that generates a more fragile consensus on the eurozone?


The joblessness is no surprise. As it has been in the US, unemployment will be a critical impediment to the eurozone's economic recovery. Spanish utility Gas Natural Fenosa has particularly acknowledged the depressed demand in Spain and the nearby areas. It's due very much to the severe unemployment situation. Gas Natural seeks to make its progress and profit in Latin America in the coming years because the outlook for economic growth in the eurozone remains grim.

But perhaps the most important piece of the headlines to be pulled out is the inflation data. We know what subdued inflation means in this era of monetary accommodation: more accommodation.

Does that mean another LTRO (Long-Term Refinancing Operation) is right around the corner, the same corner around which the eurozone economy will supposedly turn?

Doubtful, at this stage. But don't abandon the idea completely. If things get nasty, the European Central Bank will need to do something to help re-recapitalize a financial system built on crummy collateral. 

Instead, what's more likely in the interim is the strategy du jour for central banks: talk the market to sleep. 

The ECB's rhetoric, perhaps when they meet later this week, in light of subdued inflation, will signal:

  1. Economic activity shows stabilization but still has room for improvement
  2. The central bank has room to provide additional support measures IF needed without fear of generating inflation or asset bubbles

In other words: don't worry about the economy. But if you do, remember we're there to backstop it ... so don't worry about the economy.

Ok. Got it. More accommodation. Woo hoo. So what?

So, barring any real shocks to the financial system, real or perceived, we're left to juxtapose expectations for the European Central Bank and the Federal Reserve.

In the weeks following the agreement reached on the US debt ceiling, market expectations shifted mightily into believing Federal Reserve tapering was to be long-delayed. Decent US economic data is surely to erode that enthusiasm and expectations will then shift back to believing tapering is on its way in.

Assuming I'm right about the inevitable shift in Fed expectations, and the ECB's further-accommodation-if-needed rhetoric, the resulting change in yield differential will be US dollar supportive.

And that seems appropriately timed, since in just the last few weeks predictions for the US dollar's demise have ramped up noticeably. And this story about South Africa diversifying their currency reserves is sure to validate the bears' collective growl.

The euro may recoup some of its recent sharp losses in the coming days. But it could have very likely already made it through a turning point of its own, one that sends the value of the euro much lower in coming months.

-JR Crooks

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The IMF: Setting the bar low ...

We heard from the International Monetary Fund (IMF) this week.

What we heard was not good. But it was not surprising either. And that's the point, I think.

Conveniently, there's plenty to distract the market from the downward revisions the IMF made to global 2013 and 2014 growth forecasts plus the fact that the IMF believes:

  • Long-term global economic growth will run at subdued levels;  "A likely scenario for the global economy is one of continued, plausible disappointments everywhere."
  • Short-term US fiscal matters could shake-up the rest of the world
  • The European Central Bank must continue on with accommodative policy; "The ECB should consider additional monetary support, through lower policy rates, forward guidance on future rates, negative deposit rates, or other unconventional policy measures. Since these factors reinforce each other, a vigorous response on all fronts offers the best way forward. In the absence of a comprehensive policy response, matters could easily worsen."
  • Countries must use their exchanges rates to alleviate growth pressures, rather than unwind fx reserves to try and stem capital outflows
  • Some emerging markets are suffering what could be called stagflation
  • China's growth model -- dependence on exports, credit and investment -- has become exhausted and must change

Gee. How depressing.

But guess what -- the market doesn't care today. And it likely won't care too much about these comments down the road either.


Because the IMF has aired the dirty laundry. They have made know the growth head-winds and the financial risks. These things can not come as a surprise to anyone now. Ultimately, the only things that will impact the market are individual data points or trends that suggest policymakers and leaders cannot contain the risks to growth and financial markets.

Until then, investors are more than likely happy to give economic growth the benefit of the doubt.

Besides, we'd much rather focus on the charades in Washington D.C. 

Today it appears politicians are closer to a compromise than they were yesterday. Yesterday I believed ideological differences would push us past the debt ceiling deadline, force a market downturn and then generate a compromise and continuing resolution.

I tend to think we'll see the broad market, particularly US and global stock markets, slide before the month is over. I believe it will be sharp. But I also believe it will be relatively short-lived, barring a real surprise from the US debt standoff. 

The market is higher today. I'll be looking to sell into any follow-through strength early next week.

-JR Crooks



US Nonfarm Payrolls. Gross!

What a weak-handed attempted to recover $7.7 billion in redemptions last month.

That's the amount of money that flowed out of Pimco's $41 billion Total Return Fund in August. And Bill Gross is trying to stem the outflows by promoting the NEED to be in short-term Treasuries and credit.

He and his colleague, Mohamed El-Erian, are campaigning with their predictions for a very unstable investing future, albeit one where the Fed continues to maintain historically low interest rates.

They may be right about the increased instability, the low-interest rate environment, or both. I tend to think they'll at least be right about the Fed sticking to its low interest rates policy ...

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As it concerns the more immediate future -- the taper -- I think the Fed will at most gesture with a small decrease in its monthly bond purchases. But it will need to simultaneously emphasize its continued commitment to low interest rates, monetary accommodation and new bond purchases if needed.

The Fed is nowhere near an exit if you consider the global dependency its policies have created. The global economy is not ready to stand without the Fed's crutch.

What does this mean?

Well, sticking with Bill Gross's area of expertise, I think bonds may find some support here. A colleague of mine this week called shorting bonds "the easiest trade in the world right now." As such, he seemed as reluctant as I am to jump on this easy trade right now. 

On a weekly basis, this drop in bond prices (rise in interest rates) appears to be overextended. In looking at a weekly chart I noticed a similar price pattern between now and late 2010/early 2011.

In the last four months, the 30-year Treasury Bond has fallen nearly 13%. In the four months ending January 2011, the 30-year Treasury Bond fell just over 13%.

What happened after January 2011? It's interesting you ask. The 30-Year Treasury Bond price rallied 40%, low to high, over the following 17 months.

Now, I know this is not a perfect and certainly not a scientific comparison. So many things are different different between now and then. So this pattern may not be an apples-to-apples comparison. And it may not be a trading signal you're comfortable jumping on.

But it may be worth considering nonetheless. It may show we're close to a maximum tolerance level for interest rate increases over said period of time.

The US Nonfarm Payrolls report this morning was not stellar. It wasn't overtly bad either. But it was soft enough that it gets investors thinking more about the anticipated certainty of the Fed taper. 

Minneapolis Federal Reserve Bank President Narayana Kocherlakota recently said the US economy needs more stimulus, continued QE. He says the Fed’s own forecast on inflation and unemployment calls for continued accommodation. If the Fed does decide to taper, this suggests it will be a marginal move -- a gesture -- that keeps its ultimate commitment to accomodation intact.

Interest rates may find at least a temporary top if this idea gains traction.



Setting up for a US growth disappointment

It seems the US trade deficit data released yesterday went largely unnoticed. And that's usually how it goes each month, probably because there tends not to be much, if any, knee-jerk market reaction to that report.

But considering how most markets have been moving this week (up), it got me thinking about how the trade numbers might influence markets over the next few weeks ...

To recap: the US trade deficit widened sharply in August. That followed the previous month's narrowing to a level not seen since October 2009.

I was particularly wondering how this might impact the US dollar. There is not a tight correlation between the US trade balance and the US dollar, especially over the shorter-term. But the widening trade deficit is a nod to the typical dynamic -- trade imbalances -- that's characterized global growth over the last decade.

Manufacturing PMIs in US, Europe and China are all higher in the most recent month, poking above the 50-level that delineates expansion and contraction.

Despite the recent scare over emerging markets, many are quick to notice a general stabilization in global growth expectations.The US economy has been the least of the concern for investors. But if the world is seen to be stepping back into what's been a typical growth pattern, then maybe Asia (namely China) gets cut some slack. 

In an environment where things seem to be "back to normal," then maybe we see capital exit the US in search of return. Maybe the US dollar loses any safe-haven appeal and is potentially looked at as a funding currency. And maybe most markets around the world feel a reprieve from recent selling pressure.

Obviously this is all speculation on my part. And it's all speculation that I imagine would run its course in a relatively short period of time, say three to six weeks.

So I may be stretching it to think the trade deficit could have such an influence on markets in that amount of time.

But one reason (among many) I tend to think such a "back to normal" growth mentality won't last too long: the recent US GDP beat was driven largely by a surge in exports.

As mentioned, the latest trade deficit number showed the surge in US exports reversed last month. In other words: come the end of September or early October, everyone may be rethinking their expectations for the US economy. And if they start rethinking the US, chances are they'll start rethinking global growth as well.

This chart is from Part 5 of a five-part series The Wall Street Journal put together on "China's Rising Risks." Click the image to access the article.

September is well known for being the worst month for US equity market performance. That may be reason enough to expect the opposite in the early going. After all, the catalysts for market weakness -- mainly concern for emerging markets and rising interest rates -- are probably overdone in the near-term.

I expect a reprieve from general selling pressure in global equity markets and other risk assets over the next few weeks. In that environment, the US dollar probably will be pressured lower. Once the US dollar is again looked at as a dog, it should be about time for it to head higher as many have been quick to forecast in recent months.

-JR Crooks



The great Treasury explosion is coming

Take what you want from that headline!

The point I want to make is this:

We could soon witness a sharp and steep, though perhaps short-lived, rally in Treasury prices.

To be sure, I began to think we were due for a rally in Treasury prices back in June. That's when prices had already taken a big hit and there was a palpable risk-off mood in other asset classes. I thought Treasuries might get a a safe-haven boost in such an environment.

Apparently there were plenty of others who thought the same thing. Because the negative mood came and went with barely a hiccup in Treasury prices' downtrend. In fact, anyone who positioned for a rally in Treasury prices were devoured by the bears on a renewed surge lower.

And that leaves us where we are today. The downside has become quite extended. And it appears the trade is becoming a bit lopsided as the fundamentals are shaping up in such a way to confirm the suspicions driving Treasury prices lower.

But we know the market. And most of us probably respect the buy-the-rumor-sell-the-news dynamic. In this case, however, it'll be a sell-the-rumor-buy-the-news dynamic if Treasuries do rally.

As we near an anciticpated announcement of Federal Reserve tapering, Treasury prices appear ripe for a sharp, corrective rally. The catalyst may be less hawkishness -- less taper -- than expected. At the same time, I looked at the latest CFTC Commitment of Traders (COT) data yesterday morning ...

With regards to positioning in 10-Year Treasury note futures, the speculators are running an extreme net short position (bearish) while the commercials are running an extreme net long position (bullish). At extremes, the commercials tend to have it right and the speculators tend to have it wrong. Check out the following chart for a visual on this idea:


Is this explosion to the upside going to happen today? Maybe. Tomorrow? Maybe. This week? Perhaps.

It may make sense to monitor the COT data for confirmation, i.e. wait till positioning begins to reverse before throwing your bets down. (You can get the newest data as early at 3:30 Eastern on Friday afternoon.)

But needless to say, even if we are in a long-term downtrend for Treasuries (uptrend for yields), it appears a corrective rally is due to commence very soon.


-JR Crooks