I am going to be using these 2 instruments as hedges to the downside. Technically they are market neutral i.e. they are not 'long' or 'short' per se, but generally when these rally it means the algo's are selling the market and flooding into volatility or bonds. So for our purposes they will be marked as 'short' positions. This week has played out pretty much as planned other than the curveball Tuesday ... the market has drifted upward on almost no news as it is apt to do. While this week was atypical we almost always start the week with a morning rally so we'll assume there is a gap up Monday and that should take us near S&P 1115... or it might happen this afternoon since everyone knows we surge Monday morning seemingly 90% of the Mondays since March 09. Then from there it should finally get interesting.
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The 10 year bond has finally jumped back to near the 50 day moving average which has coincided near perfectly with iShares Barclays 20+ Year Treasury Bond (TLT) "filling the gap" at $102 as we mentioned we'd be interested in seeing in the weekly summary. It's taken all week but we are here (or close enough). I'll begin with a 2% exposure. If the 50 day moving average breaks, I would assume this would correlate with a break out of this mega range of S&P 1040 to 1130... i.e. it would mean we are breaking to the upside.