ST Equities

1. SPX drops to 885 or so.

2. Buy TQNT/BZH/TOL leaps.

New Trends

Treasuries, Gold etc.

QE is in progress.  The Fed (even the hawks) have no fear of inflation.  As long as capacity utilization is so low, producers have no pricing power, that is true.

However, if the government continues to take on more debt and monetize it, the $ will head downward.  There are counter forces -- the Euro is worse, the $ is still the reserve currency, but ... the government may actually be trying to devalue the dollar.

The $ will head downward because no one wants to earn such low rates to hold a currency that is being printed more and more.  

But what is the alternative?  You have to use the $ for trade.

Other nations are moving away from the $.  How?  Nothing is working so far.  If global markets crash, the $ will once again be king.  Bonds have fallen from $120 to $87.5 in six months.  Everyone is talking about it.  Bonds will now rise to at least $95 and possibly to $100.  Long bonds (short TBT) at $90 is a nice ST trade.   

- Shorting the Russell may also be a good trade.

Shorting the bonds at $95-100 may be a very good long-term trade.  Or long LT interest rates.  

See, the Fed is buying 10 year paper, but people fear QE will devalue the dollar, so others are selling the dollar.

- Very short term: TLT will touch 92.45 (6/17), then bounce to 90.5 (June 17-18).

- Then TLT will rise to $95 - 97.5 as equities bottom.   Long TLT at $90 may be a safe counter-trend trade.  (Or short TBT, rather).

- Then, as equities rise again, TLT will bounce down to $85-86 (late July).

- Then, when equities collapse later this year, August - November, TLT will rise to $95-100.

- Finally, TLT will drop to $60.  Gold will rise to $1300 at least.

- Trade of the decade: Short TLT at $92.3 (June 17 ST), around $95 (June .  Short again 

Equities

SPX will fall to 880 (June 20), rise to 970 or so (end July), then test new lows (late 2009).