Thursday, June 4, 2009

Does .001 Matter??

As I suggested this morning, 10 year rates needed to clear the 3.715 level today. Do you think that all of my three-period babbling is irrelevant? Look at how the note rates surged in the final minutes to edge out the previous closing high by .001! at 3.716. The 10-year rate closed three days ago at 3.715. Does it matter? Is this a successful test of the high? Or does the .001 make all the difference in the world?

Rates continued to push higher on the electronic exchange after cash market closed. Rates tried to reach the 3.75% level but quickly backed down. I was hard pressed to buy note future calls to close out my shorts but no one was selling. Could this indicate that tomorrow, the unemployment report will be worse than expected and rates will fall? It's a hard call here. Rates want to get to 4% as discussed in June's Trendsetter published this past weekend.

How Does This All Play Out?

At some point, rising commodity prices are going to have a negative impact on the economy. Today, gas prices on my corner rose to $2.95 from $2.25 a few weeks ago. One major investment bank is now calling for much higher oil prices this year. Energy prices surged today after falling back a little yesterday. Reminds me of the bubble when the analysts would come on and say that a stock will rise 50 points this year and the stock rose the 50 points that day. Irrational Exuberance I believe the Maestro called it. Seems as if we are getting back to this mentality. Really, these markets are nothing more than casinos. The volatility, even though it is reduced, is still extreme. There are trillions of dollars coming in and going out of markets in short periods of time. Be sure to keep your emotions in check. Have a plan when you get in, don't take losses beyond your means, take profits when your objectives are met. You don't have to win every last penny. Just be sure that you don't lose it.

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