You Know You Are in Trouble
1st February 2009
When both stocks and bonds are losing value.
I was surprised to read Bob’s post about how bad January actually was for the stock market. When you consider that the top of the current trading range was set on the 2nd, and we are again looking to test the trading range lows at 800 on the SP 500, it is easy to see that it was not a good month. The fact that we have been in a trading range may have lulled me to sleep in thinking it was not that bad of a start to the new year.
What concerns me is that it was an even worse month for long term bonds. The exponential rise in bonds and fall in rates certainly set that market up for a big fall, but even investing in the good ole USA has proven to be a bad strategy since the beginning of the year. There really was no place to hide.
On the other hand, the Iron Condor we described a couple of weeks ago is still holding up. We will probably test the low end of that trade on Monday. We would like to see a bounce off of 800, but if we do close below 800, you will want to exit that trade.
JD
