1/28 Morningline

Treasury long bonds (the ones that mature 20- and 30-years out) are showing a potential pps bear signal at the outset of trading. The price of the TLT exchange-traded fund, which tracks such bonds, gapped below Wednesday's trading range and then rose a bit.

Blue chip stocks (SPY) did a reverse move, gapping higher at the open and then declining. It is now back in the trading range of the two prior days. The fear index (VIX) is showing a otential pps bear signal on a gap down and an increase back, both movements on the small side. . . .

Lower bond prices translate into higher interest rates, and the conventional wisdom is that higher interest rates are bearish for stocks, because the better returns attract money that would otherwise be sloshing around the stock market. Bond prices sometimes rise on the expectation that the economy is improving and the Federal Open Market Committee will therefore need to raise short-term interest rates. And if that's the case, you would think that higher rates would be good for stocks, because an improving economy means more business and better earnings. Ya pays yer money. Ya takes yer choice.

Let's run the numbers . . .

Indicators, at about 10 a.m. Eastern:

• Blue chip stocks (SPY) are trading at $109.67, entered bear mode at close on Jan. 21 (at $111.70)
• Fear index or volatility (VIX) 22.98, bull (bearish for stocks), Jan.21 (22.27)
• Treasury long bonds (TLT) $91.33, bull, Jan. 12 ($90.32)
• Corporate junk bonds (JNK) $39.03, bear, Jan. 13 ($39.85)
• Gold (GLD) $106.67, bear, Jan. 12 ($110.49)
• Oil (USO) $36.19, bear, Jan. 12, ($39.63)

 Forex currency pairs:

• Dollars per euro (EUR/USD) $1.3968, bear, Jan. 15 ($1.4385)
• Yen per dollar (USD/JPY) ¥90.21, bear, Jan. 12 (90.97)

Stock options holdings, February expiry:

• CVS, iron condor (p29/-p31/-c34/c36) $33.21, bear, Jan. 21 ($33.24)
  
• ERTS, iron condor (p15/-p16/-c18/c19)  $16.94, bear, Jan. 22 ($16.27)
• MCO, covered call (s/-c30) $28.61, bull, Jan. 27 ($28.83)
  
• PALM, covered call (s/-c13)  $11.38, bear, Jan. 22 ($11.93)

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Topics:
S&P 500, SPDR, Spiders, Treasury bonds, high-yield corporate junk bonds, gold, precious metals, oil, petroleum, CVS, pharmacies, drugs, Electronic Arts games, Moodys bond rating, Palm smartphone Pixi Pri.