Since the markets can go three ways at any point in time – up, down or sideways – a prudent investor evaluates all the data prior to putting on a trade. Our evaluation of the bond market shows it is almost there, but not there, yet. Many investors and traders have tried to front run this trade and been burned because it has not materialized – yet.
The 30 year T-bond has declined in yield approximately 55bps in the last 4 months. An additional 15-20 bps would hit the bottom of the channel. The short Treasury trade should occur after the yield hits the bottom and makes the upward turn. Properly placed, this trade should provide a very nice return.
The US markets should also provide attractive opportunities for tactical investors! . The US market is drifting sideways and down and could very well hit an interim bottom between June and August perhaps 10-20% lower. The market is long overdue for a correction, which will happen when it happens – we interpret the data, we don’t predict. As stated in previous blogs, the “tell” is evident.
Prudent investors have been exiting all year, first in biotech’s, momentum stocks, small caps and the Nasdaq; others should follow. Longer term technical analysis shows the market will bounce most likely into the year end. Remember,DO NOT trade from this blog. This is for informational purposes to disclose the MCS analysis and evaluation each day. It contains our thoughts on the present market at this point in time.
DISCLOSURE: Opinions and estimates offered constitute the judgment of MCS and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.
This article was written by Metropolitan Capital Strategies CEO Sharon Snow and Chief Investment Officer David Schombert.