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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: bobby beara who wrote (18858)	6/29/1999 10:04:00 PM
From: pater tenebrarum	Read Replies (2) \| Respond to of 99985

Bobby, i agree on the rally potential of the bond. last week market vane's bullish consensus was at 22% - that's a reading consistent with a bottom. there is also a mountain of put open interest at the 114 and 116 strikes (september futures contract) and such levels tend to be defended. also a rate hike benefits the long bond in terms of several fundamental aspects, such as the greater likelihood of an economic slowdown and the associated effect on inflation. we will see how a rally in the bond contract is received; according to this indicator: decisionpoint.com the 'bond-has-bottomed-out' scenario has already found some acceptance. it is also a widespread assumption that a rally in the bond market will produce a rally in stocks. but the stock and bond markets have clearly been decoupled ever since the crisis that began last summer.first a strong rally in bonds was accompanied by a plunging stock market, and from the october lows a strong rally in stocks coincided with a plunge in the bond market. now i know there are a myriad rational explanations for this unusual occurrence, but it is still a nice contrarian thought that a rally in bonds will actually coincide with declining stock prices once again. regards, hb