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Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Tuesday, August 24, 2010

Long Treasury -- Substantial Overbought

The long guy is heavily overbought against its 40 wk m/a and on
RSI, not to mention a 12 week MACD that is sailing up into
overbought territory. As the chart below will show, there is even a
price gap to be filled. The long Treas. is not quite yet a perfect short
because the trader advisory services are not yet at extremes of
bullishness.

There is heavy and faster moving money chasing this market. It is
running ahead of fundamentals and there is positioning long here in
anticipation of what some players see as a September / October
debacle in the stock market as stock traders bail out on a perceived
failing economic recovery.

The Treasury price is now momentum driven and will require a
strong flow of negative economic news to sustain it. It is foolish to
try to call a top in this kind of surge, but it is wise to remember that
a positive turn in economic data flow could well net you 20 price
points to the downside.

Long Treasury Chart
.

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