If you looked at a chart of the Interest Rate futures and the DOW futures you would probably not see a whole helluva lot at first glance. But I can tell you from firsthand experience that SELLING all rallies in the DOW and BUYING all dips in the treasury market (either the 30's or the 10's) is a strategy that has made a lot of money over the last few weeks. This is very tough for a trend follower but I believe that traders must take what the market will give them. This simply means that you need to be flexible and adapt your trading to market conditions. I believe that, eventually, these markets will break out and continue their respective, long-term trends. And, as long as I'm on the subject, I'll reiterate what I've been saying for a very long time - the recent market action just confirms my long-term forecast for these two markets.
DOW - a slow, grinding decline to 7,000 and then a collapse.
BONDS - yielding 3% eventually.
The only caveat that I must offer regarding the Bond market is the possibility that we will experience an extended period of STAGFLATION (floundering economy with rising inflation), which is looking more and more likely as the months roll by. Under this scenario, should it materialize, bonds would turn out to be as poor an investment as stocks. I'll keep you posted if my opinion on Bonds changes for the worse.
Commodities are HOT! Buy 'em now and hold on for the ride!
Dale F. Doelling
Chief Market Technician
Trends In Commodities
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