Treasuries and the Market

Last week, I think Friday, I said I'd tighten up the stops or close the long position in TMV and the short in TLT (both slightly profitable on the latest trade-did even better in the first trade). Something is up with Treasuries and it could have a profound effect on the market. We all know that the Fed is manipulating the market but we also know that it is through treasury purchases. I don't know if the Fed is in the mist of a change of heart or the market is carrying a bigger stick yet to be wielded, but these charts are interesting and worth watching, especially in light of the earlier PIMCO turn-about and de-leveraging. It seems there's some uncertainty n the air.

Using TLT as a proxy for the 20 year, note the bullish wedge which is one of the reasons I began to grow skeptical of the trade. The wedge is accelerating recently. 

30 min 3C chart of TLT-a change coming? 

Now the S&P in green compared to TLT in red, there's an obvious inverse correlation. Also note that TLT is roughly near the April lows while the S&P has made significantly higher highs-a testament and proof positive in my mind of the Fed's manipulation of the averages in creating what I believe is a front, "The wealth effect"-the idea is just too ridiculous to be believed.

So if TLT reverses and heads up and the correlation holds, we may indeed be facing a market/asset bubble ready to pop. As I've noted, the market structure as it relates to liquidity, is severely damaged which would make ANY downside move as exaggerated and likely more exaggerated then the unprecedented single file straight march up we have seen in the market with almost and in some cases, no healthy bull market corrections. If any of this is close, then now is the time to have some dry powder, to watch any long positions, especially in the market averages or leveraged ETFs of market averages and now is also the time to acquaint yourself with the idea of short selling and to make sure you have a risk management plan in place that you follow religiously.  Even a quick look at past bull/bear markets, will show you it falls a lot faster, further and harder then it rises. And that's where your edge is in a downside situation, while most other market participants watch their gains turn into losses.