What is out of Sync ?
Since June 3rd we have been talking about our expectation of a trading range asset market for the May to October period. The bottom of the expected gold range 1275 to 1500, was tested overnight at 1285 and probably will be tested and breached a bit over the few weeks. Stocks on the other hand tested the top side of their 1587 to 1662 range yesterday at 1654 before Ben spoke. Again over the next few weeks the bottom side will probably be tested and a move down to close to 1550 is very possible.
What is out of sync now in the big picture sense is T-Bonds. We have been out of our short T-Bond position since the first up move in interest rates in March, basis the September T-Bond futures that would have been around the 139 level. This out of sync action is primarily based on a view by the markets and the FED that the economy is strongly improving. I am not so sure about that. A long T-Bond position which we have not had in ages is getting close to initiation.