To Have or Have Not

This updated chart of the 10 year T-Note tells just about the whole story. Two weeks ago, I said that it looked likely that interest rates were headed lower and that is what we have seen. Since then we have also seen the Dow challenge its recent August 16 low. While both interest rates and stocks could bounce higher in the short-term, the line of least resistance seems to be lower for both of these markets. This short term strength in stocks, if it appears, should be used as an opportunity to lighten up. It seems likely that some of the weakest stocks in the last six months though are setting up for a bounce, so those who are short the real estate and finance stocks should be careful and may want to use short-term call options to protect profits.