Thursday, October 26, 2006

The Two Iron Laws of Speculation

Here is a daily bar chart of December T-bond futures. I last commented on this market here.

I still think this market is headed lower, but it is at junctures like this that I constantly remind myself of the two Iron Laws of Speculation:

Iron Law # 1 - Never fight the trend.

Iron Law # 2 - Never forget Iron Law # 1

The market appears ready to close above its last high on the way down at 111-06. This is the third day of the rally from 109-27 and we have had two previous rallies, one of 2 days and one of 3 days. If the market shows strength above today's high tomorrow I will conlcude that it is headed to 115 instead of to 108.

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