Up Up & Away For TBT & Amazon

I’ve written and discussed shorting treasuries for some time now and I was a little early but now it’s paying off big time.  It could just be a technical trade or the real fear of future inflation.  Whatever it is, investors are running for the exits from treasuries.  Even though the Federal Reserve announced yesterday they would continue to aggressively buy long-dated securities (they mean treasuries), that hasn’t been enough to stop the selling and causing interest rates to continue to rise.  Are foreign governments concerned they won’t get their money back?  Is China not purchasing as many treasuries because of Timothy’s Geithner’s comments over the weekend?  Or, is it that governments can’t afford to keep buying as many as they have in the past?  Whatever the reason, the TBT trade is working.  I own DXKSX which is a fund that does the same thing.  I show a picture of TBT below because many of you trade TBT and have asked me about TBT.


TBT is at a level now it could struggle in the short-term as the $45 level is roughly the place it was in early December.  We could see a run to $50 before real profit taking.  But, the bubble may have finally burst in the treasury market.  It’s about time.

Amazon after hours

Amazon (AMZN) is rocking after hours, up 13.5%.  If this can hold for the morning, Amazon will be breaking out of a long down trend.  I’ve been wanting to do a pairs trade with Amazon & Best Buy where I go long Amazon and go short Best Buy.  I believe Amazon’s model is better and it’s pretty simple.  Amazon doesn’t have stores to maintain.  Best Buy does.  During a recession, people don’t drive as much or go out as much to save gas and money on eating out, etc.  But, they are still surfing the web and when they do need to buy something, it doesn’t get any easier than buying it in the convenience of your home using Amazon.  That pairs trade hasn’t worked in the past but over the long run I think it will. 

This post published at www.karleggerss.com

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January 2009
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