Tuesday, May 18, 2010

TLT Run Continues

Once again the day finishes with GLD, TLT, VIX and SH in the green and with TLT proving to be the real winner after a quick look at relative betas. It's actually a bit curious that the Rotator doesn't rank TLT higher than GLD after the recent run up but that may come to pass by the end of the week. A number of traders I work with had projected a bullish run this expiration week after last week's weakness but so far that's turned out to be a pipe dream.
I highlight the GE chart as it may be putting in a possible bottom at these levels and, as I've mentioned in previous posts, I have a real enthusiasm for various risk/reward setups that are unique to GE. I'm currently hedged a long GE position with 18 calls so I'm keeping a closer watch on this one than usual.
On the currency front the dollar continues it's ascent, essentially tied with GLD for #1 rank but clearly displaying a substantially greater momentum. The real news is the Euro ETF, FXE, which has been steadily downslope since December 09. From that time until now the FXE has dropped from 149 to 121, an almost 19% drop and the 45 degree downslope on the FXE that has been in effect since May appears to be accelerating as it rides the LR30 mean. Worth keeping on your watchlist as it's unlikely that US capital markets will rebound without a reversal of European pessimism as reflected in the FXE.

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