Despite a tough week for stocks into Friday, February 9, three big picture macro indicators have continued to support a risk ‘on’ backdrop. Many of the shorter-term indicators we watch, like Junk bond ratios and the Palladium/Gold ratio say the same thing. Junk/Treasury and Junk/Investment Grade are threatening new highs and as we have noted in NFTRH updates all through the recent market volatility, Palladium (cyclical) got hammered vs. Gold (counter-cyclical), but only to test its major uptrend. Now the ratio is bouncing with the market relief that is so predictably taking hold (here’s a public post where we effectively called bullish, in-day on that Friday). (more…)
I have a question for my beloved readers today and I’m hoping one of you has a good answer. I’ve teamed up with an options expert friend to run a directional options portfolio based main on futures options for the last three months, and we’ve been recording the (very impressive so far) trades and results on a spreadsheet. We’d like to move this onto a professional web based alternative that we can publish from. The setup needs to work with futures options, auto-update the options prices, and not be restricted to basic options strategies etc. Do any of you know a good way to do this? The winning reply gets three months free membership if we later launch this as a paid service, which is where this is probably heading.
Onto the equity indices. I was mentioning yesterday that the daily middle band on SPX would be an ideal target for this rally and that has been tested on both SPX and ES this morning. Some rejection there so far and it’s possible that the rally high is in, though I’m sceptical about seeing a lot of downside in what remains of today, on an opex Friday, going into a three day weekend, so we’ll see. Intraday Video from theartofchart.net – Update on ES, NQ and TF:
Here’s the daily middle band test on SPX. Possible hourly RSI 5 sell signals are brewing on both SPX and RUT and one has fixed on NDX. Everyone have a great holiday weekend. SPX daily chart:
I try to have a lot of different ways of looking at the macro backdrop because if enough of them imply the same thing then a strong probabilities-based thesis can be made.
For instance, currently we are looking at long-term Treasury yields hit (10yr) or get very close to (30yr) upside targets. You know my stance there; I think risk is pretty high for a downward reaction in yields before too long. I’ve backed that view with portfolio balancing positions in 3-7yr and 7-10yr bonds. But even if a reaction comes about (and especially if it doesn’t), the big question is whether or not we are going into territory that has been uncharted for decades.
So are we going to eventually break the Continuum’s limiter? Here is the 30yr yield, almost to a target that few saw coming several months ago, outside of this website when we ID’d the downward consolidation as a bullish flag and used daily charts to gauge bullish patterns in the 10yr & 30yr. (more…)
As noted on this compressed monthly chart of China’s Shanghai Index (SSEC), price is currently in between major support (the apex of trendline convergence) at 3000 and major resistance (38.2% Fibonacci retracement) at 3368.