Why I’m Buying Bonds At 5.5%

The 30-year Treasury yield hit 5.44% on Thursday. That’s its highest level since 2004.

I’m buying bonds right into it.

I’m short bond futures puts at the 104, 103, and 102 strikes. I also bought bonds outright.

I see an opportunity few traders get in a generation. I’m also ready for some near term pain.

If the 30 year yield climbs to 6.5%, bonds could drop another 10 to 13 points. I’ll load up more if that happens.

The stock market gives me another reason to want bonds. A handful of names hold the S&P 500 (SPX) together, and I expect a wicked rotation back into bonds when they crack.

Here’s what I break down in this weekend’s video:

• Only 45% of S&P 500 stocks traded above their 200 day moving averages on September 24th. A month earlier, 70.57% did.

• Just 25.44% sat above their 50 day moving averages, down from 58% a month earlier. Participation more than halved in 30 days.

• Meta (META), Microsoft (MSFT), AMD, Intel (INTC), Micron (MU), and Apple (AAPL) are holding the entire index together.

• The 10 year yield hit 5.2% today after sitting at 5.1% two days ago. TLT made a two standard deviation move below its expected move this week.

• The SPX priced a $98 move this week and landed $98 higher to the penny. Next week prices $108, and I’m taking the over.