Always do what you are afraid to do. – Ralph Waldo Emerson

The trend in bonds was bullish for a long time, and one can see how bonds ran up during that time frame. Currently, it’s neutral and that also has to be viewed through a bullish lens as it should have turned negative given the run-up. Bonds need to close on a weekly basis above 160.00 relatively soon. In fact, there is a good chance that if the next run up fails to take out the August highs of 161-23, bonds will be paving the way for a move down to the 152.00 ranges and then 147-148 ranges.  Traders willing to take on a bit of a risk could consider opening long positions at both levels.  Some funds could be deployed at 152 or better and some at 148 or better.  Market Update, Nov 1^st, 2015.

Bonds traded as low as 151-12, fulfilling the first requirement; the next stage calls for a rally that could take bonds to as high as 155. After, that bonds are expected to trade below 151-12 and as low as 147 before a tradable bottom takes shape. For now, the bond market is catering to the twaddle that the Fed is going to embark on a rate hiking program. 

Copper’s breakdown already is a sign that the illusory economic recovery is falling apart. If the Fed’s want to embark on the perfect scam, they will stabilize copper to give the illusion that all is well. Who knows, they might still do this.  For now, we believe that even if the Fed does  raise rates, it will not be part of a new trend; the goal is to come out with another stimulus program.  

Despite the current pullback, bonds are still rather overbought, so there is room for bonds to drop even lower, but this is not the end of the world as Bill Gross has been stating for some time.   Look at the bombastic titles of some of his articles. Bonds will experience a very strong pullback one day, but waiting for that day could be disastrous.  

Bill Gross: Capitalism ‘can’t survive’ at 0% rates Full story