Morning Brief Friday June 8, 2012

Good Morning. Finally a quiet day in terms of outside noise such as economic data and Fed speak and certainly no Chairman Bernanke testifying on the hill.  At the close on Thursday the model issued an intraday short signal on RUT and SPY which as discussed may likely produce similar daily patterns noticed on May 1 and May 29 which preceded multi-day sell offs.

Adding to that probability is that the past five Fridays have all closed red as the desire to reduce risk into the weekend was more prominent. The fact that markets experienced a short fueled rally the past few days there are likely more longs versus shorts looking to reduce risk into the close today.

The model stopped out of a short position on FVX, five year yield at 7.37 for a gain of 20.22%. This leaves 10 and 30 year yield still short but they too have lost the strength of the short signal. Although I do believe Treasury has lower yields ahead it is possible a little more sideways action is needed as volume during the breakout was massive. Perhaps a little buyer fatigue. The model is clearly showing downside fatigue within yield.

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