Slope of Hope Blog Posts
Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.
Since the Fed increased rates in December, the bond market has been rallying. Many have told me that the Fed controls all markets. Many have told me that you cannot fight the Fed. Many have told me that the Fed controls the bond market.
My question is if anyone has told the bond market this?
The Fed has now increased rates 3 times since December of 2016. So, if the Fed truly controls the bond market, and if the Fed truly controls the direction of interest rates in general, doesn’t that mean that overall rates should be rising?
Well, the bond market does not think so. Since December of 2016, the bond market has been rallying, as can be seen in the attached chart below of TLT. Yet, the Fed has raised interest rates 3 times during this rally.
I always enjoy using literary, philosophical or other references in the titles of my posts when I’m not summarising the central theme of the post in it, and this post narrowly escaped being entitled ‘The Curious Incident of the SPX in the Daytime’, before I decided that the central message of this post was too important not to be used as the title. The title would have been a reference to a quote from the famous Sherlock Holmes short story ‘The Silver Blaze’.
The point is of course that while NDX/NQ did almost exactly as I predicted in my post last night, reversing in the right area back to the retest of the daily middle band on NDX, closing a handle below it, SPX/ES and RUT/TF were left at the starting gate, both closing not far above the lows for the day. What does this mean? Well at the least it means that the possible extension higher that I was looking at on SPX/ES if NDX/NQ now breaks up towards the all time high retest is now unlikely, and if NDX/NQ breaks up here then I wouldn’t be looking for more than an all time high retest on SPX/ES, and likely not even that on RUT/TF.
The new all-time high in the Technology Select Sector SPDR ETF (XLK) established on Friday June 9 followed by a high-volume Key Downside Reversal remains the dominant feature of the post-November upleg, and was accompanied by a glaring upside momentum divergence that serves as a warning signal indicative of upside price exhaustion.
2) All of the action since June 9 has carved out a sideways digestion pattern beneath the cresting 20 DMA, usually a harbinger of approaching downside price continuation.