So markets are up a little again after yesterday afternoon’s sell-off from the highs. Bonds are a little lower, but, seemingly hanging on.

Why are they hanging on?

If the Federal Reserve were coming to the rescue, why are yields still where they are? Why has the $85 billion not made a dent? Of course the counter argument is equally valid, viz, bonds have stopped going up, are the sellers exhausted?

Since no-one has a particularly persuasive argument for either side, simply standing aside at the moment is probably not a bad strategy. Churning the account getting long, stopping out, getting short, stopping out is an exercise in frustration and futility.

Part of the problem is that this rally from 2009 has been hated all the way. It was hated because people missed out. They missed out on some major buy-the-dip pullbacks, which made them hate the rally even more. At some point they threw the towel in and committed to buying-the-next-dip, which this is. The problem is that this dip is a little different at the moment, although it may well turn out to be another buy-the-dip, things are a touch iffy at the moment.

Keep an eye on the Treasury market. If Bernanke and the Fed are acting, this is where you will get confirmation.

What if the current yield is where the Fed actually want yields? Possible. Again, keep watching for the market to remain stable at the current levels.