Things Getting Back to "Normal"?

Now that I've had a few minutes to digest a bit more about last week's trading sessions, I've made what I think are some interesting observations.  First, the VIX had a hell of a down week (probably releasing some earnings anxiety) and second, long term treasuries were socked pretty hard on Thursday and Friday to end the week down over 3%.  Meanwhile, the overall market continued its steady climb upwards with the S&P 500 up over 4%.

Why this struck me is because it looks "normal".  The market is up, the VIX is down and bonds are down.  Gold went in various directions (mostly up because of the worldwide speculation of de-dollaring) but seemingly uncorrelated to both stocks or bonds.  This is a pretty normal market 1 year after everyone in every asset class lost their minds.

I've had the feeling that all asset classes that I hold were short term overvalued.  I felt the inverse one year ago and I bought with reckless abandon.  I've been holding cash on the sidelines waiting for something to crack and the first thing was bonds.  I snapped up some TLT this week and I have my eye on some TIPs probably when they crack below $101.00 and some more at $100 and so on.  If the inverse movements between bonds and equities continue, I may even sell some stock and beef up on bonds.  This will hopefully hedge against the snap back that may or may not occur.

The market is feeling a little "text book", which has me nervous.  [grin]