So Far not much Distribution

My only short that is decisively working is SRS (short REITS), which is breaking out nicely. But the overall market is just looking like another base is forming, which could be the beginning of the next move upwards.

I wrote a quick note to Gary Kaltbaum yesterday. I said "Is anybody worried about the 20-year bond (TLT) but me??" About 9:00pm EST last night he wrote back: "I am watching TLT...but nothing doing yet."

Now I can interpret that remark several ways. One way is yeah the long end of the curve is looking a little dicey, but there's no trade yet. Yet...

But I'm really fascinated by all the winds blowin' around the bond market lately. Usually bond rallies trigger stock rallies. Over here this morning we've got Bill Gross calling for THREE RATE CUTS by the Fed over the coming year, which effectively would un-invert the yield curve...and yeah, I don't like America's bond saleman touting bonds on national TV either.

But if just close my ears, stop the chatter of my mind and look and the TLT chart, I'm left with an inescapeable conclusion: THERE IS A DISTINCT DANGER OF BOND YIELDS TICKING *UPWARDS* OVER THE COURSE OF THIS YEAR. This fits with the worldwide trend of mopping up excess liquidity across the UK, the EU, Japan and China.

The FEDheads have been naughty puppies this year. They have turned on the printing presses while trying to talk down inflation. I do not know how it plays out, but it could be very interesting.

What would happen to the stock market if the yield curve suddenly and dramatically went from slightly inverted to dramatically normalized?? I honestly don't know, but I don't imagine it would be very comfortable.