At Whitewave, we follow a set of indicators that we’ve found to be reflective of future price action across a wide array of asset classes. Some of these indicators are based off of price action over the next few days.

Time travel…3 months ago, this coming Monday-Tuesday was the final sell off Low in the Equities and highs in the Bonds for the past Qtr. It’s been a big ride! Now we’re watching our indicators to see if the sleigh ride will end or continue.

So yes, we are waiting and watching to see if the stocks can get much higher…and the Bonds a little lower and “reverse” or if this direction will continue to maintain in both the Equities and the Bonds. This will take a few days to play out.

Many Research pundits keep calling for a top in the equities. We sold three times this qtr. All three times the trades went “in the money” and we got out unscathed ( break even or a small winner), mainly due to our trading philosophy which is stated below. We don’t fight the flow!

Markets only have a chance for major directional turns every so often. We’re coming into one of those periods over the next few days. It’s not unusual to have some big 2 way back and forth action before a market turn either. Generally, there is some pain involved, which we would like to avoid by being patient. “Let the board set up first”.

Our style is not to make a bold call and get run over, like some prominent Elliot Wavers do. We’d rather wait for all the markets to align,” when the Currencies, Bonds and Stocks all sync up” so we can enter with a defined out ( stop).

You’re always better off trading from a side after the turn and missing the first wiggle, then to continually try to pick a top thinking you might miss something.

30 yr. Bonds…Our focus is here…We don’t believe the spreads can turn until the Bond Futures are ready to bottom. By rejecting the 200 day mvg avg yesterday on the highs, it does not seem ready to turn.

Model Trading Portfolio…Current Holdings

………………                               Stop Close             Profit Points

No Current Holdings

Short Term View

Location ,Location,Location….if you have a good trad able pattern “Good Risk reward!” You just have to seize the opportunity and see what develops!

Trade to Make Money!

Medium Term View…

30 Yr. Bonds …147 is the all time high in the front month futures. We will watch price action off this level for any potential surrogate moves in the currencies or stock indices. 144.20 ish now becomes our macro pivot. All new closing strength over 145.20 would have us looking for more upside in the Bonds. Closing above this level would be short term positive the Bonds and negative the Equities.

We’re going to be eyeballing a “possible” Long over the next couple of weeks via either the 30 Yr. Futures of the TLT ETF. We will be monitoring the Spu/Bond spread to confirm a trad able level. While the markets could certainly turn at month end, the week after could provide the better opportunity. Since we only trade what is in front of us,we’ll wait for a proper setup to initiate.

Equities…We will continue to strategically buy hard breaks in Etf’s and individual instruments we feel have the best risk profiles going into the end of the first qtr.

Currencies…Our view is the Aussie Dollar remains a most attractive investment. The Bonds are high yielding making this currency desirable on breaks. It also has the benefit of the underlying commodity and Asian growth story to support buying the dips.

The Aussie typically mirrors the S&P 500 which also makes it an easy surrogate to trade, whether Risk On or Risk off. It’s liquidity makes it easy to hedge currency risk if you’ve the underlying Bonds, which makes you Long Aussie by default.