Is this Investing?

Yesterday the markets spent the whole morning in the red waiting the Fed report. Why would the market be down in anticipation? Either investors felt a) the Fed would indicate the economy is bad (really?) and do nothing leaving investors holding the bag, or b) the Fed would say the economy is rallying - knowing that it isn't really - and do nothing. So, when the Fed reported that it would act to keep interest rates low the market rallied. Why did the Fed feel the need for more economic support? The economic rally is stalling out and needs a new push. So, the real news is bad (slow economy) but the new action is good. The market will take a handout with pleasure and so markets move up.

Then we sleep and forget yesterday. Today, the Asian markets are providing bad news and an indication that global economies are stalling. So, futures are down 1.5% this a.m.

Though the markets are making strong moves up and down (resulting in mostly sideways movements) quietly in the background the Treasury markets may be providing guidance. Here's a snippet from FundMyMutualFund:

Meanwhile as equity investors drink (Fed provided) Kool Aid, the bond guys continue to send warning shots - the 10 year is now down from 4% (in April) to under 2.8%! Shades of mid 2007 when giddy equity investors had not a worry in the world as they sent the S&P 500 to all time highs in October of that year... while they whistled past the graveyard. I have a feeling we're going to be looking back at this chart in Q1 2011 and talking about similar whistling.

The 10 Year Treasury yield is dropping because investors are moving money to Treasuries which force the purchase price higher. The yield is at 2.72 prior to market open.

In my view, the economy still seems very slow. There will be no recovery until people get back to work and those who are working feel some security. The treasury yield indicates that people are opting for bonds rather than stocks right now. So, in spite of the fact that the SP500 daily Trend is upward and the weekly trend has now crossed above the Trend Line (bullish), it just seems like we should be moving down.

My strategy is going to be to play along with the market (long) but hold very short leashes keeping stop-loss orders close. I won't be viewing any drops as buying points to go long but will watch these as potential short opportunities. In otherwords, my bias is to the short side.

Keeping all long positions for now.