Slope of Hope Blog Posts

This is the heart and soul of the web site. Here we have literally tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. You can also click on any category icon to see posts tagged with that particular category.

10-Year Yield: From A 35-Year Bear Market To A Generational Bull Market

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From Mike Paulenoff: In early March, 10-year yield was circling 2.87%. Now it is circling 3.00% for the first time in 4 years. The increase is probably shocking to many analysts and investors. Neither economic nor inflation data provide adequate justification for yield to be higher than it was two months ago. But there are times when the contradicting longer-term technical set-up should be heeded, even when the trend lacks strong support from lagging tabular data.

4 29 18 Monthly YIELD GIF

In scanning the past few months of U.S. economic data – such as Retail Sales, New Home Sales, Personal Spending, Consumer Prices, Non-farm Payrolls – what jumps out is the variability of the data. Most of these data series reflect a zig-zag pattern that belies a consistently strong directional economic impulse.

On April 27th, investors received their first look at the advance estimate of Q1, 2018 GDP, which came in at 2.3% compared with consensus estimates of 1.8% to 2.0%. More surprising, perhaps, was the subdued Q1 Price Index at 2.0% versus estimates of 2.4%, although the inflation gauge did remain at the Fed’s 2% target. (more…)

The Bottom in 10-Year Treasury Yield Signals a Change of Era

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by Michael Paulenoff, MPtrader.com

Summary

  • The bear market for benchmark 10-year Treasury yield is at its end – disruption is coming
  • Numerous indicators corroborate: we are in the midst of an economic transition
  • Will the Powell Fed quickly evolve into a strong counter-balance to the powerful economic transition?
  • On an intraday basis, we explore these overarching themes overlaid on price behavior in my private investing community at MPtrader.com.

Take a close look at the monthly chart of benchmark 10-year US Treasury yield (Fig. 1) for the period 1981-2018, a 37year period. The dominant bear market for yield may still be alive but is not necessarily all that well.

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Generational Opportunity for Upturn in Yield

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We have been long the ProShares UltraShort 20+ Year Treasury (TBT) — the inverse, double-levered, longer-term T-bond ETF — in our MPTrader Model Portolio, expecting a downturn in T-bond prices in conjunction with a generational opportunity to capture the upturn in yield and interest rates after a 35-year bear market.

Yes, “the turn” has become a marathon, certainly not a sprint. However, increasingly my big-picture technical chart set-up argues strongly that yield will inexorably grind higher towards significant bullish catalysts that will propel both yield and the TBT higher in the months ahead.

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Financials & XLF May Have Further to Run

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Financials on Monday responded positively, as expected, to the prospect of tax reform legislation, with names like Bank of America Corporation (BAC), Citigroup Inc. (C) and JPMorgan Chase & Co. (JPM) all gapping up on the open, following by higher closes of between 2 and 3.5 percent.

The Financial Select Sector SPDR ETF (XLF) surged 1.5% to close at 28.00, after gaining nearly 5% last week.

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Financials & XLF May Have Further to Run

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Financials on Monday responded positively, as expected, to the prospect of tax reform legislation, with names like Bank of America Corporation (BAC), Citigroup Inc. (C) and JPMorgan Chase & Co. (JPM) all gapping up on the open, following by higher closes of between 2 and 3.5 percent.

The Financial Select Sector SPDR ETF (XLF) surged 1.5% to close at 28.00, after gaining nearly 5% last week.

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Eye on IWM Versus SPY:  Is Bull Market Losing Steam?

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On November 6, we noted in our Mid-Day Markets update that a comparison of the SPY and IWM showed a deterioration in the Russell 2000 small-cap ETF relative to the big-cap SPY. We said that as long as IWM was trading below its 20 DMA at 149.11, we would view it as vulnerable to downside continuation off of its Oct 9 all-time high at 150.58.

We were watching and continue to watch this SPY-IWM relationship closely, as, historically, in the later stages of a bull market, a divergence is very likely.  In other words, as a bull market loses steam, small companies lose upside momentum relative to the “go to” mega-capitalized companies. (more…)

XME Miners/Metals ETF Pushing Towards Significant Breakout

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The SPDR S&P Metals and Mining ETF (XME) could be on the verge of a surprising, very powerful upside breakout after completing a 6-month corrective accumulation period.

After Trump was elected last November, the XME climbed from just under 25 to a February 2017 high at 35.21, or a whopping 41%, in anticipation of the enactment of the Trump agenda, concurrent with lower taxes, stronger economic growth, and upward pressure on inflation.

Thereafter, however, in reaction to the Administration’s failure to pass health care legislation, coupled with a myriad of disappointments and political fumbles, prospects for “The Trump Trade” faded miserably.

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