Category Archives: Financial Markets

Yield Curve Update

Weird goings on in the T bond market, with the 10-5 curve rising slightly but the 10-2 dropping hard.  Might it have something to do with poor 2 year auction demand?  This looks like a gap up from yesterday and a sag today (along with 10′s and 5′s).  To me, SHY continues to be a buy with yields up and a positive CoT structure for the 2 year Note.

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10, 5 & 2yr yields from Bloomberg

Here’s the state of the yield curve compliments of Treasury…

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Current yield curve from DoT

CoT – Gold, Silver, Commodities & T Notes

Among its 29 pages of high quality market analysis, this week’s NFTRH (#287) reviewed the Commitments of Traders (CoT) structures of a few markets and their implications.

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The above CoT graph clearly shows that gold has declined as the structure improved (red arrows). It then bottoms with the circled extremes and rises in conjunction with a degrading structure (green arrows). Gold is still on its journey toward bottoming.

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NFTRH 287 Out Now

nftrh287We got the market bounce that was anticipated by NFTRH 286.  Now #287 gets about the business of gauging what the bounce will be.  A post here at the site set a target for the NDX up around 3600.  If that comes about, the S&P 500 for one could pop to new highs.

Then, there is the Semiconductor status to deal with (above 10 year support) and a whole host of indicators that beg caution.  The market is now fun for me even though the Market Gurus Association would not even let me in the front door, let alone issue me a crystal ball.

Precious metals?  Well there’s a short-term view, which I think we all know by now is bearish.  But there remains a longer-term view that continues to support a different potential.

Also, in line with the rhythms of my own personal journey, a new aspect of the service will be coming as I finally get comfortable with the idea of managing chart based trading opportunities, both long and short for those interested.  NFTRH+ (trading) will be coming soon and it will give some people more of what they want, while separating out noisy updates for those who want to keep a non-trader’s perspective, which should in my opinion be the majority of people who are not full time market participants.

NFTRH 287 is out now and it’s (IMO) a good one.

2014: State of the US Markets

What better day than today’s predictable hard bounce to present the other side?  If you believe the bounce and want to be a happy bull, just step along from this post.  If you don’t mind considering other opinions or are like me in thinking 2014 stands a better than even chance of being the year that the current cycle ends, check out EWI’s 24 page report by clicking one of the graphics below.

We have come to a point in this cycle where we are supposed to feel ashamed for having bearish views or opinions.  Prechter’s wrong again after all.  The thing is, even a bull could use some alternate opinions.  I am not talking about a market crash.  Please.  I am talking about a macro view.  That should be someone’s basis for operation.  I have my views and they have not changed since early last decade because the things I had negative views about have not only not changed, they have intensified and shifted (commercial credit replaced by official credit).  But there is still a debit waiting out there.

We who hold a negative big picture macro view were stupid until the 2008 liquidation made us geniuses.  Now we are stupid again and trend followers are smart.  Wash, rinse, repeat.  EWI is an affiliate and I make a commission on sign ups to their services.  So consider this a promo.  Also consider that EWI was founded by someone who was an influence of mine.  So it’s not just a pitch.  We’ve only recently gotten with the idea of partially funding all the free information here with ads, like most blogs have routinely done all along.  Consider this an ad that I wholeheartedly recommend.  And the darned thing is free for crying out loud.

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NFTRH 286 Out Now

nftrh286Think about the year long topping process of up and down spikes on the HUI Gold Bugs index in 2011.  Now think about things that may be working on replicas of that activity (hello US stocks) and things in the mirror that may be working on the inverse of it (hello grinding and dispiriting gold sector).

Now think about how long these processes take to play out and the patience involved.  Also think about trading or defaulting to cash, because at times of change the volatility is something to behold (going both ways).

NFTRH 286 out now.

 

Jeff Gundlach; MW Blog Notes

I have had positive feelings about DoubleLine Capital’s Jeff Gundlach since I saw him interviewed last year talking about strong Treasury bonds amidst the hype and hysteria about rising interest rates and the ‘Great Rotation’ out of bonds and into stocks.  While the media trend followers tried to take advantage of headlines, he simply said what he thought.

MarketWatch live blogged a luncheon speech by Gundlach

Notables:

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NFTRH 284 Out Now

Just continuing to do what I feel needs to be done in a market like this.  The Semi’s would lead a bull charge, while Tech, Biotech and Small Caps would lead the bear.  Throw in some indicators like BKX-SPX and especially the Equity Put/Call ratio (making a hidden bear signal that I for one found pretty compelling) and we lean bearish.

As for the precious metals?  Well, when we were noting a bearish CoT structure and Ukraine hype, the ‘community’ was noting breakouts and bullish objectives.  Nagging details like the CoT?  Cue the crickets…

That’s all under the bridge now.  It’s what’s directly ahead that is important.  NFTRH 284 looks ahead to coming signals, and it’s out now.

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TIP-TLT = Muted (at best) Inflation Concerns

The TIP-TLT ratio has been in decline from a resistance point since late last year.  The ratio tends to generally rise and fall with inflationary and deflationary concerns, respectively.

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That little bump up (that ended up failing at the trend line) was probably in line with the explosion in certain outlier commodities like Agriculturals.  People need to eat food after all.  But the Fed’s introduction to the discussion of a Fed Funds rate hike out in the 2015 distance (“you know, that sort of thing”) has wrung any inflation concerns right out of this market.

A great gig they have going; with ZIRP intact indefinitely they continue to inflate, but with a few words, the market gets right back in line and in full servitude mode.