Who says that watching the stock market tape isn't exciting? Over the past two days, stock market bulls and bears have been battling for supremecy. The Bears, who have been beaten up badly and working hard to push the market down. The Bulls however, keep making a comeback. This is in light of a big move in interest rates and Fed Chairman Ben Bernanke asserted that interest rates WILL RISE sooner than later.
Shares of TBT, often discussed in this blog, are rallying off of lows on this news.
Ultimately, it could be the course of interest rates that will define the market top or bottom. Certainly the TBT chart shows a very fine bottom in place. As interest rates rise, TBT will also rise. And as has been often discussed in this blog, bonds and stocks have been moving up together. With the end comes, expect both stocks and bonds to fall. TBT though goes up when bonds fall. Consider speaking to your investment adviser about adding such an instrument to your portfolio. Experts fear that the Federal Reserve will not drain liquidity quickly enough to limit inflation. TBT could be an ideal way to protect yourself against rising rates.