Stocks 'N' Bonds

A few things to watch in the coming week.

Despite today's pullback, my primary indicator remains bullish, so I'm buying the dip.

The SPX buy write is lagging the underlying index, so the bulls are looking good for now.

The spread between equities and bonds looks ready for a breakout, potentially to the upper Bollinger.

HYG, which I've been a big fan of since here, had an EXPLOSIVE day. Fixed income continues to provide stellar capital gains as investors scramble to grab yield in this 0% environment. Taking partial profits is probably a good idea, but such decisions are dependent on your trading time frame. 88 looks like MASSIVE resistance.

JNK is following in the footsteps of its higher quality brethren, so keep an eye on this lovely ETF.

The market has had a stellar run of late, and conditions continue to grow more bullish. Another day of pullback and consolidation would be healthy for the bulls, but I'll let the tape do the talking. I'm maintaining a conservative position size per trade, but it is growing as the volatility decreases.

Monday Mutterings

It was a choppy roller coaster day, but there were some bright spots.

International markets stayed afloat as commodities moved up.

The financial sector finds itself in peril once again. Stay away from the big names who are too big to fail. Their bond holders might see cash, but the equity gets wiped out.

HYG printed another near term high, but the upper Bollinger is a good place to take profits.

Treasuries made a new high, but in an ominous fashion, reversed and sold off sharply till the end of the day. I've acquired some TBT and will add more if the tape presents itself.

The weakness in equities and strength of commodities versus bonds was unusual. I purchased a tiny amount of DBC to take advantage of the money leaving Treasuries.

Short trades continue to pay, but the weakness in bonds is divergent with the direction of equities. The money leaving the safety of bonds must go someplace, potentially energy and precious metal related categories. This market continues to move slowly relative to the past few months, but stay focused and take advantage of the few opportunities 2008 still offers.

Dabbling in Debt

Fixed income ETF's continue to show strength in a weak market.

I continue to add to my HYG position as the momo in this ETF has yet to wane.

After closing my LQD for a hefty gain, I've made a smaller reentry with a tight stop.

Emerging market debt continues to make solid gains, but the lack of volume in this issue makes it a terrible trading vehicle.

SHY is losing momentum, but I wouldn't get short too quickly.

I'm nibbling at these Muni's, but with such bleak economic news and weak volume, I'm just as liable to get short if the market moves against me.

Surprisingly enough, the debt market remains resilient in the face of mounting adversity. With so much potential for continued government intervention, the market favors debt to equity. Most of these issues have fundamental problems, but if Uncle Sam is putting in a bottom, then it is a risk I'm willing to take.

Market Makeup

A rundown of various market themes for tomorrow's trade.

Despite the hefty haircut in the QQQQ's, my NASDAQ indicator is still bullish. Buy the dip is still in play until I see some O's, but I'm taking very small positions.

The BXM/SPX ratio is bearish as long as it is printing X's. Nevertheless, it is approaching resistance and a 10sma downtrend.

After mentioning HYG here, I rode today's wave up and I'm adding to it as the tape presents itself. JNK also has breakout potential.

Another bullish indicator is the rising summation index.

The first sign of potential inflation is here as the spread trend between the 30Y Treasury and Gold begins to loose momentum.

Today's action was a little hairy for a buy the dipper, and if there wasn't such a strong late day rally, I'd be pretty worried. Tuesday will be critical as further weakness will likely make my SPX indicator bearish. Smooth trading to all, and happy Hanukkah to my fellow tribesmen.

Bernanke's 0% Means Buy Junk

LQD has been good to me, so why not move down the quality ladder for higher yield?

I'm kicking myself for being too lazy to post this chart last night. The large volume in high yield corporate debt suggests that risk sentiments are changing.

If you like high yield, here is a ton of rising junk you might be interested in.

Emerging market debt is making a 2nd Bollinger violation. I wish there was more volume in this issue.

Muni's have found stability, and offer tax free yield.

Bonds are offering ridiculous yields whilst rising from panic induced bases. If inflation gets nasty, these will lag the market, but if you want to lock in yield, this collection looks promising. My trade in LQD has come to an end, but I think I'll try an scoop up some of these lower credit quality plays if the tape presents itself.