We got a boost from the ADP this morning ahead of the open. I think participants are just looking for any clue that things are stable or even a hair better. As long as there is no new negativity the market seems to be treating par as a bullish cue. Obviously the pattern has been one of holding and/or profit taking as institutions hedge bets against any negativity in the releases this week. All the earnings in the world can’t stop that fear. I said weeks ago that the broad market action is fairly obviously tied to treasury yields. After taking a huge hit in 08-09, equity investors just can’t handle any more losses. We are seeing it with our clients and partners as well. But the problem is usually when there is risk aversion there is a simple fix which is to shove the money in the mattress (read: Treasuries), but with yields in the toilet that is no longer much of an option. Sure, we have seen a mad rush into the 10-year but mark my words when I say the trade is crowded and people are going to get slaughtered again in that trade. They just never learn that buying and holding anything without multi-strategy focus is antiquated and just isn’t going to work anymore. The world may by dead f’n broke before they realize it though. Lol. So where do we go from here? Who cares. The markets will move and when they do our trend programs will trade them and when they stop our intraday contrarian programs will fade them. There should be some good levels again today. The Euro is flat and the carry trade is back on with the strength in the Yen, although we did just get a pop in equities and some selling in treasuries just now. We are certainly about due for a trend day out of this range but it may not happen until the end of the week. We shall see. Keep an eye on the ISM at 10 and the Oil Inventory at 10:30 and be careful as always…
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