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a new short idea

Bonds have had a very good run for months, but having finally closed the price gap, TLT seems to be sputtering out. It’s not exactly shocking: the notion of lending money to the very-much-in-trouble United States of America is losing its appeal. It won’t be long before we’re just like Japan, pathetically being the only buyers of our own debt.

Having said that, the drop in interest rates lately may have run its course. If that’s true, then it’s a red alert for homebuilders. My biggest nominal profit is my short position in D.R. Horton (DHI), which I intend to keep so long as it doesn’t cross above the neckline I’ve drawn.