On Treasuries and the Superman S&P

It has been a quiet week in the markets, but there are a couple of things that I have taken away from this week's trading.  The first thing is that the Treasury market is much weaker than I thought, and that many are actually now made a 180 degree turn from the beginning of the year when many were looking for higher rates.  I see more people now confident that rates will remain low.  That despite the furious rise in interest rates from the October 15 bottom.  I have been wrong on Treasuries and taken a hit but I don't believe being long Treasuries for more than just a short term trade is a good bet.  Seasonally the Treasury market gets weaker from the beginning of December till the next spring.

As for the S&P, it remains resilient and it seems like many are dumbfounded at its persistent strength.  It is a recurring pattern of stubborn strength for several weeks after a V bottom.  Now we are in the beginning of the seasonally strongest period for stocks, especially on an up year, and with expected strong holiday retail season, there will be a lot more bullishness building up into Christmas as we grind higher.  Even Greece worries in the EU and a weakening Eurostoxx hardly put a dent into the S&P freight train.  We are headed higher, and I do expect a break of 2100 by the end of the year.

Finally, I do see crude oil close to the bottom, price-wise, but from a time perspective, I don't expect much of a rally till we get to January.