What goes up ...

The market rallied sharply into a triple-watching expiration on heavy volume. This would normally be a good sign. But coming after multiple days of distribution and during a week in which the market indices posted small losses and preceding a week with Fed action, I am inclined to take such rallies with a grain of salt. Expirations are usually unwound on the following Mondays and I would expect this expiration to be no exception. Also, the market and the economy have been led by the housebuilders for the last few years. Yet, the worst performing sector on Friday was this same group. This is a good time to be short the lot of them. BZH, DHI, KBH, RYL and TOL are all ready to be shorted. With interest rates headed higher, it is only a matter of time before the overheated real estate market cools off and with it the US economy and in response to that, global growth. The bond market dropped while gold broke out and oil dropped. Not what one would expect, but you have to give the markets the benefit of the doubt, so it is best not to sell gold as the seeds of destruction of the US fixed income market are being sown, if they are not sprouting already. So stay short the housing stocks, start lightening up on other issues, hold gold and keep duration short in anticipation of better yields a year or two down the road. And be prepared for a 'surprise' rate hike next week as the outgoing chief economic/financial mischief-maker tries to reign in the powerful and ultimately destructive forces he himself has foolishly unleashed over his greatly over-rated tenure.