Early this a.m. we spoke of the need to watch the possible double top in the Bonds as a signal that the S&P would hold based off how the “Long SPU/Short Bond Spread” works. It’s a capital flow thing…Are investors putting money to work ( buying stocks)? If so, the money has to come from somewhere. This somewhere is the selling of lower yielding ( lower risk…safe haven) assets like the 30 yr. looking for or chasing the higher yielding ( riskier assets…high yielding stocks).

My view is overall negative the market. We know we will see bounces at the big technical levels. Sometimes you just don’t know which one is going to lead to something really big, however you can spread your risk via other instruments at defined levels ( what I like to call cheap looks) where you know your risk, ” out or stop”.

Therefore if the S&P rally continues I would expect the Bond futures to sell off ( Long TBT)

Corn…We had a tgt in the Corn futures just over $8…we have known for a long time that $14.14-18 was a tough zone in the July Soybeans ( needing all new strength over this level for follow through to $15.) The grains were all limit up after the crop report waiting for the Chicago pits to open. First ETF’s do not always line up with the futures! Secondly it’s pouring down rain on LaSalle St. here in Chicago. For all you non-commodity types when it is raining on the CBOT every trader has their palms out yelling sold in expectation of a good crop. So that combined with the grains at their first set of big tgt’s makes for a compelling reason to take a good chunk of money off the table.