Tuesday, December 07, 2010

 

The tax deal






Apparently neither the Left nor the Right is too happy about the deal that is being cut to extend the Bush tax cuts. Neither are the markets. The chart on the right is the Ten year treasury note yield. 3.16% is not that high but you can see the trend and if we get through 4% the skies the limit. I don't expect a huge run up in interest rates, deflation is not over. But when the gov't announces they are going to spend an extra $900 billion over the next two years then it isn't surprising when the price of money rises.

The second chart is the Dow futures and I included it because there was a beautiful triangle pattern yesterday. Just textbook. The sell off today was also interesting because we have completed a 5 wave rally that started on 11/29. I am still looking for tops since the market's momentum has slowed. We are looking at a rather large dome top. I will blog about that another day.

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