Long Treasury -- Wildly Overbought

The 30 yr. Treas is trading in yield down close to the previous record low levels seen during
the deep recession period of late 2008. The shorter term fundamentals -- falling industrial
commodities prices and declining production growth momentum along with dips in other
cyclical pressure gauge measures -- have supported the downtrend. The long Treas. has priced in
a thorough going recession. With the Fed's new "operation twist", there is also a firm bid under
this market as the Fed swaps out of maturing short term securities into longer dated maturities.

I link to the 30 year yield along with industrial metals prices here. Whenever the $TYX trades
at a steep discount to its 200 day m/a as it is now, you have to be very careful. the same thing
applies to when the $TYX is trading well under the comparable prior year level as it is now. 
These are signals of a profoundly overbought market, when the yield can jump 100 - 150 basis
points in short order on a couple months worth of stronger economic data or the announcement
of easier fiscal or monetary policy (or better news from the EU on handling high risk sovereign
credits).

Relative to the experience of 2008, the long bond, on the current spike down in yields, is
trading way ahead of the weakening economic fundamentals it anticipates and leaves holders at
great risk if the bet fails and the economy does better. Viewed long term, this is a super volatile
market as you have fast money hedgies parking money here or leveraging shorts in low quality bonds.

Bull sentiment among advisors is also running at high levels and sentiment contrarians should
note that.

The market is unstable now and to counteract that lack of stability, I will probably wait for the
$TYX to rise and hold a bit above the 25 day m/a before shorting it (Check chart link again).