The day after the night before

So the crisis has passed.  Or has it? That can must be kicked into a pulp by now, surely.  Only another three months to the next drama – Happy Christmas, everyone!

But what interests we merry band of traders is: what are the markets up to?

Now we are in a ‘sell the news’ phase, will stocks retreat?  They have come off yesterday’s tops a little and it too soon to call The Top, but I shall be watching action over the next few days.

Crucially, with government people back at work today, will we see an updated COT report tomorrow? I sorely need to see it – and suspect hedge funds and perhaps the small traders have upped their bearish trades in Treasury futures.

But the most critical market is the Treasuries.

Here is the position this morning in the December T-Bonds:

My EW count is very much on track and I expect a new high in w5.

Sentiment is still very bearish.  Most pundits are expecting interest rates to rise.  Yes, but in the meantime, they will fall in order to purge the excess pessimism.  That’s how markets work.  In the process, a dip in yields will confound those same pundits and many will switch sides.  That is when their original hunch will play out in a wicked whipsaw.

For traders who understand the ways of the market, this knowledge is invaluable for taking profits.

A move above the w3 high will trigger a mass of buy stops.  This should be spectacular.

I remain long T-Bonds.