The stock market continues to rally, ignoring the stream of incoming economic data which seem to be telegraphing the collapse of the housing bubble and concomitant slowing or elimination of economic growth. The disconnect seem ominous to me, but belief in the Goldilocks economy and/or the omnipotent Fed’s “Bernanke put” is widespread.

On the other hand, bonds are rallying and yields dropping, apparently discounting the end of the world, pretty much. Wish I’d kept those TLT calls, right idea, bad trading. The commercials in the bond market are still record short, accommodating the (heavily long) speculators. Usually the commercials are right. Should probably be buying TLT puts and will on a clear trend reversal.