June 18, 2009

The Treasury announced Thursday a record $104 billion worth of bond auctions for next week, part of its herculean efforts to finance a rescue of the world's largest economy.

The sales will exceed the previous record of $101 billion set in auctions that took place in the last week of April and consist of two-year, five-year and seven-year securities. That record was matched by another $101 billion week in May.

Though next week's total was broadly in line with expectations, worries about supply have weighed on the U.S. government bond market, which will see a mammoth $2 trillion worth of new debt issued this year.

Stop the madness!!!!

Oh...it's too late, we can't.

U.S. Stock markets rallied today pushing toward the 927 - 935 level in the S & P 500 relieving the oversold condition brought on by the first wave of selling since posting a top at 956.

Option expiration day is tomorrow. If not already short, any rally above 923 should be shorted aggressively, add to positions at 930 with a stop at 938. A push to the 935 level could be reached but the reward side of this short position is great at this time.

Gold has broken down as well. Although gold is very attractive long term, the deflationary influence in this market will take down gold along with the commodities which have already started to decline. Gold could move below $700 per ounce at which time we will be aggressive buyers.