Up, Up and Away

No, not stocks, at least not today. That dirty little word "distribution" jumped up front today. Not the greatest of distribution days, but clearly one, nonetheless. It seems to me that aggressive traders can start to take some short positions, with tight stops, and look to double down on a break of NDX 1564. Long positions should have been trimmed on Monday's strength, if not, now is the time to start doing some selling. There will probably only be one or two more decent selling opportunities in the next few months. The housebuilding stocks have taken it on the chin and will probably do so some more now that rates are on the rise in earnest. So long BZH and RYL! 3%+ percentage losses on larger and above average volume point out another case of distribution. There is that word again!

Bonds have cooperated beautifully with the script outlined last week. Look out for 4.9% on the ten-year note in the next two months and look out for the Fed as the realization that they are behind the curve (again!) dawns on them and the restraint of the Presidential election is behind them. Look for them to continue doing what they have been doing for the last ten years: driving monetary policy like a drunk on an icy, winter road. Only at this point, there may some dangerous curves ahead. Whatever happens, it will be exciting! (I don't think excitement is good, when I refer to the economy. And anything that is exciting with respect to the "undertaker" of our Federal Reserve cannot be good.)