What a Day, Glad I was Short

What, did he just say he was short?  Didn't the Lawyer Trader just post something about the intermediate trend being up and that the path of least resistance would continue to be up...?  Although I did say that, I also said that this was subject to change and change it did.  I've been short for 2 days and I piled into TZA (Triple Short Small Cap) this morning at the open...an etf that gained 10% today!

So what happen to change my mind and give me the conviction to pile on the shorts this morning?  Well something occurred over the past couple of days, especially yesterday, that over rode any bullish bias.  That something was in bonds, and bond spreads to be exact.  I've posted about my Treasury Spread Indicator before and it gave a glaring sell divergence yesterday.  Here's the chart: 

So what's the significance of this divergence portrayed on the chart?  Well it basically boils down to the stock market and the bond market disagreeing on the state of the economy and the state of the stock market.  Stocks were flat and bonds indicated that stocks should be sold off.  When that happens, it pays to bet with bonds. 

Have a great weekend.

TLT