2/17 Daily Commentary

In spite of I1 rise I tiptoed into a short stock position with 2% SDS at 20.77.  The wave count is compelling in both the futures and cash markets.  I may be early, but I limit exposure to a nominal proportion of capital.  A clear 5 up is complete. 

I intend to hold short until either a new high is registered or DJI falls to critical support M/A.

The top in stocks is supported by a buy signal in bonds.  In the initial stages of a bear market there is no flight to safety, so yields can continue to go up and the dollar can continue to decline.  3-month Libor is at a very low level .31, but central banks around the world are snugging up rates even though Ben is doing his 0% Keynsian dance.  It is up from .3 1 month ago and .28 3 months ago.  I expect the dollar to complete it's abc correction of it's first 5 wave up tonight.  Put it all together and it paints a picture that is bearish for the stock market.  I'm a bear, have been for years, punctuated by respect for a bull market but always aware that the world is on very thin ice. I expected bonds to continue in their basing pattern while the stock market rallied on.  Instead they broke out to the upside and are in the very early stages of a bull run.

While I'm not currently long the dollar I expect to buy this evening or early tomorrow.

I'm holding 4% TLT long bonds.