One very curious aspect of the powerful upmove in the equity market during the past 24 hours is the lack of opposite selling pressure in the bond market and Lehman 20-year T-note ETF (AMEX: TLT). If in fact last week's plunge in equities (into yesterday morning) aroused fears of an implosion, and with it a flight to safety in the bond market, then removal of such fears might be expected to reverse or eliminate the flight-to-safety premium. From the look and the behavior of the TLT's today, I have to wonder what is preserving the buoyancy of the long end of the Treasuries?

Is it the prospect of a recession? Lower oil prices, and thus less inflationary pressure going forward? The need for additional FOMC rate cuts? An upside reversal in the dollar? Or could it be more sinister in nature? Such as continued fears that the credit crunch is not behind, or that perhaps a hedge fund or five could blow up if this advance in equities totally reverses? Who knows…but actions speak louder than words, right? So I am staying long the TLTs (the long end of the Treasury curve) for a while longer.

By Mike Paulenoff

Mike Paulenoff is author of the MPTrader.com (www.mptrader.com) , a real-time diary of Mike Paulenoff's trading ideas and technical chart analysis of Exchange Traded Funds (ETFs) that track equity indices, metals, energy commodities, currencies, Treasuries, and other markets. It is for traders with a 3-30 day time horizon, who use the service for guidance on both specific trades as well as general market direction

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