The Ukraine hysteria on Monday was almost too perfect; almost too per the script. One indicator that was done no good what so ever by the charge of emotion was the TLT-SPY ratio (one measure of risk ‘off’), which jumped as the least savvy players took the bait and knee jerked bearish as the media pumped the story. The subsequent reversal has damaged TLT-SPY, technically.
So if risk does not go ‘off’, where does that mean risk is? Well, risk would then be ‘ON’ in more ways than one.
Risk ‘on’ would mean further appreciation in assets and further degradation of the risk vs. reward ratio, which already sucks. A lousy RvR does not mean don’t play. It simply means that the market is at risk, similar to how silver was at 39>40>41>42>43…
I get it. I continue to look silly posting bearish things as the market levitates. Well, here is another silly bearish nugget for good measure. Sure, the sky pilots in junk bonds are chasing yields to the heavens. Why, just look at HYG go!
But its ratio to long-term Treasury bonds is not so stellar. It’s just another small divergence to the bull festivities, but there it is none the less.
I happen to think nominal T bonds have a good shot at rising soon. If that should happen, for risk to remain ‘ON’ junk bonds had better rise even faster.
GLD climbed above lateral resistance yesterday and moved above the trend line. It is on a bull signal by all data points. The pattern measures to 129 assuming the green line holds as support.
GLD is on a weak bull signal. It must get above the downtrend line or risk fading to neutral or bearish.
GLD remains on a bull signal.