T-Bond Bubble A Sign Conditions Are Bad With No Reversal In Sight

Bulls seemed very confident and their clamor, “the bottom’s in” has been hard to miss or avoid. But, like our penguin friend above, bears tripped bulls up today and yesterday. While we may still rally some into the end of the year, it seems more likely we just slosh around.

Today could’ve been just some options related games Da Boyz were playing with strike prices. It’s what they do.

One thing noted yesterday was the Treasury bond bubble sends a very serious message that economic conditions are bad with no reversal in sight. The Fed’s aggressive move on Tuesday suggests a similar message; conditions are so bad that fear should be just as likely an investor reaction versus the initial optimism it received.

But, it’s quad-witching that began at the close today with most settlements tomorrow. A lot of weird trading can still occur.

Volume was similar with yesterday while breadth was as negative as you would expect as our man in Geneva reports in:

Tomorrow completes quad-witching. Once that’s out of the way volume should slow down as we enter the holiday period marked by two shortened trading weeks. I’d also suggest, as have others, that investors [and even window-dressers] are exhausted and in much need of rest.

Markets seem like such a guessing game right now. RIM reported a better than expected outlook and the shares climbed 5% in after hours trading. With bulls seeking any good news maybe that will rally markets tomorrow…um, I guess. I continue to believe as previously that stocks can’t go much higher until the bond bubble breaks freeing up cash. It’s amazing to see 10 year yields at barely over 2%. Only some really frightened investors or restricted fund managers would buy that paper.

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