Bad week for bonds.

As the situation in europe shows signs of a positive resolution the fear will come out of the long bond market. This should make for a good move to the downside in long bond prices and an increase in the yield. This may be a major top if it happens. Bonds have been in an uptrend for 30 years, culminating in the real-estate mania that topped out a few years ago. Since then the uptrend has been held in place by the fear of economic collapse in this country and around the world. As those fears subside, if and when world economies return to growth the fear will be of inflation. There are still billions of people in the developing world who want a modern lifestyle. This will put inevitable pressure on food and energy, not withstanding the natural gas prices and availability. And politics will continue to move this country to a protectionist stance. All of this is bad for long term bonds. It will not happen overnight, and there will not doubt be some rallies in the bond markets to come, but this may be the top in a long period of declining interest rates.
Here is a chart of TLT the Lehman long bond fund.

I anticipate selling below all of the recent lows. Perhaps a cascading effect similar to the recent gold selloff. Bonds are a different animal tho. Each market has it's own personality. The way to play such a move is to short the TLT or for long only investors buy a fund that shorts the long bond. Such a fund goes by ticker symbol TBT.

Always limit your losses by getting out if a market goes against you. It is better to keep your money and live to play another day. Sometimes getting the timing right means several trys at a move or a stock and if you let the market give you a big loss you won't want to look at that market, let alone trade it. Don't lose money is the first lesson of profitable trading. And don't take your eye off the ball. Scale in as the market proves you right. The big money is made off the big move so don't get greedy or in a hurry.....

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