There has been a lot of talk in the pits and on the streets that some heavy hitters are gobbling up bonds by the truckload. The technical picture still remains DOWN but remember, it's always darkest before the dawn. I am a major BULL on bonds longer term and I've been waiting patiently for the first sign that we're nearing a bottom to start loading up on them. That opportunity may be at hand. Yesterday's gap up opening and strong close is the first sign that this market may be ready to turn higher. I'm going to start nibbling from the LONG side today and, if I'm right, this market could be several handles higher before the end of the year.
Remember, bonds are the best indicator that I know of futures economic conditions and, if they turn higher, the stock market is destined for much lower prices. I'm already heavily SHORT the DOW futures and I'm expecting a bloodbath soon. Bonds will be the ultimate beneficiary as the "flight to quality" begins to build.
Dale F. Doelling
Chief Market Technician
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