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Tuesday, August 30, 2011


This morning we have a fed head making waves that we need more easing in order to get the economy moving. Chicago fed president Charles Evans says "9% unemployment is consistent with recession" and that has bonds rallying and stocks selling off this morning. Its probably no surprise that stocks would sell off as we have been up 5 of the last 6 sessions and up over 200 yesterday.

Both charts are lying right against the declining 34 day moving average so its a logical place for something to happen. Its hard for me to see a sustained rally in here in the overall market with the 10 year hovering below 2.20% and the 30 year nearing 3.50% this morning. I still believe that we will see a 1 handle close on the 10 year before this is all over and that stocks need to see a 9 handle on the dow before any meaningful bottom is in place. And with regards to the 10 year we have this from Pimco's Bill Gross.

MLPS meanwhile are back around 350 on the index and half way between the 310 intraday low 2 weeks ago and the 390 index high a few months ago. Not much in they way of news drivers this morning and no upgrades or downgrades in the group. Yield and a low bond rate continue to make mlps relatively attractive. More importantly they seem to have resumed their ability to predict short term trading rallies. When markets are dropping over a period of days or weeks; when mlps finally get thrown out the window is usually a sign of a market turn coming. They are always the last to be thrown out the window in a panic. So we have that little indicator to work with again....unless of course one day and we hear of a tax threat from Washington.

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