I bought 2% SDS at 25.05 and just shorted DJ futures at 11,379. I count 5 down on SP futures and double-zigzap on DJ futures. The reaction wave 2 retraced 62% of this decline for SP and DJ.
I bought 2% ZSL short silver ETF at 11.70. This is less exposure than silver futures. When gold opens I'll short gold futures because I can get in with less volatility.
So I'm long 2% EUO, 4% SDS, and 2% ZSL. I'm short DJ futures and soon will be short gold futures.
Basically today chewed up the clock after a 5 down in the stock market. Prices came right down to the 5-minute, 370-unit M/A and I sold 2% of a 4% position. The strategy remains to trade a large ascending triangle in the making in DJI and XMI which is Minor wave 4.
The bond market is falling which indicates that the buyers are demanding more yield for their money. The tax deal continuing existing tax cuts and shelling out another 73 weeks unemployment benefits occurred in the same week as the budget deficit commission report was laid to rest. To ratchet up spending, ratchet down taxes, and speak budget deficit reduction in the same breath is Washington at it's best.
The more bonds decline the more locked in the Fed is with it's portfolio. Sure they are collecting interest at small rates and they will hold over 2T of Treasuries come June but if we get a bond market demanding 8% long rates their capital will be shot to hell if they sell them. They will be forced to hold them to maturity.