Friday, July 21, 2017

07/10/17 US 10-Year Bond Chart $IEF

10-Year Chart
Those that view the message of the market on daily basis are likely confused by trading noise. While trading noise contributes to the long-term trends, it does not define them. Human behavior tries to explain trading noise as a meaningful trend. This confuses the majority which, in turn, contributes to their role as bagholders of trend transitions.

US 10-Year's overall trend, revealed by trends of price, leverage, and time, are defined and discussed in the Matrix for subscribers.

While coordinated 'stimulus' supports a countertrend rally of commodities foreshadowed by negative concentration discussed months ago, it won't reverse defensive global capital flows regardless of the hype. Defensive flows likely includes US Treasury bonds until the wolf pack culls the herd of weak European and Asian debt. Only after they're thinned will the focus turn to the US. Gentleman could very well prefer government bonds, notes, and bills at least in the initial stages of the next panic.

What Mellow omitted is that investors prefer the public sector (bonds) when confidence in the private sector (stocks) is failing. Investors preferred bonds in 1929 because confidence in the private sector was failing. While gentlemen could prefer bonds in the initial stages of the next panic, they'll like turn on them as confidence in the public sector falters from an already shaken position. This will burn a majority populated by central bankers and followers of today's bullish headline hype rather quickly.


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Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.

Thursday, July 20, 2017

266 Days Without A Correction - So What! $SPX

News
266 days without a correction of 5% or more. The most basic definition of the trend, a message that perpetually eludes the majority, the stock market is a buy (or sell) as long as price and volume are aligned up (or down). Consolidation, a mismatch between price and volume, favors a transition from up to down ahead, or vice versa. The probability of this transition increases substantially under compression (+BW), a sharp reduction of relative volatility. The statement that stocks have traded 266 days without a meaningful correction fails to ask the following:(1) are price and volume aligned, and (2) if so, for how long?

The S&P 500 has produced an annualized profit of 15% for 69 days. The average aligned up impulse has produced a 27% return for 60 days since 1950. Today's impulse, for all the shock and awe commentary, is very close to the historical norm. The longest aligned up impulse has been 178 days.

This balanced and objective analysis, however, is likely too boring for mainstream media (MSM). Their goal is rating and clicks, not profits. Chose wisely what you consider to be good information. The assumption that well-dress means 'smart' has cost more trading portfolios more money than all the flash crashes combined.

These trends are monitored weekly in Trading Notes for subscribers.

S&P 500 PREV Long Term


Headline: Here's what is most vulnerable with market at record highs



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Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.

07/10/17 #USTreasuryBond Chart $TLT

US TBonds Chart
Those that view the message of the market on daily basis are likely confused by trading noise. While trading noise contributes to the long-term trends, it does not define them. Human behavior tries to explain trading noise as a meaningful trend. This confuses the majority which, in turn, contributes to their role as bagholders of trend transitions.

US Treasury Bond's overall trend, revealed by trends of price, leverage, and time, are defined and discussed in The Matrix and for subscribers.

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Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.

07/19/17 #Sentiment Model $SPX

Sentiment
The old American idiom of a day late and dollar short is an phrase easily applied to majority's ability to time (buy or sell) US stocks. The majority, influenced more by instinctual behavioral tendency of the individual to seek acceptance of an emotionally-driven crowd than act independently in the minority, views rising and falling stocks prices as bullish and bearish. This tendency that drives them chase when probabilities favor fading relegates the majority as the consistent bagholders of history's panics and trend changes.

Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.”, John Templeton

The Sentiment model, an excellent standalone trading tool for US stocks include The Matrix, should be used by investors looking to outperform the buy-and-hold investment strategy. The model produces the following observations: (1) bull and bear phases have produced average annualized returns of 26% and 61% and 32% and -7% since 1992 and 2017; these returns significantly outperform buy-and-hold (B&H) average annualized returns of 8% and 7% over the same periods, and (2) stock returns are clearly not random as taught by popular academic theories.

Sentiment Model Output 2015 and 2016

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Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.

The Death of US Manufacturing

News
Politicians talk, but the secular trend that transferring production/manufacturing from high to low cost countries remain undisturbed under North American Free Trade Agreement (NAFTA) and Trans-Pacific Partnership (TPP).

Under NAFTA, cheap American grain shipped to Mexico, thus, destroying peasant farming. This prompted migration north in search of jobs. American factories began closing as desperate Mexicans were willing to work for very low wages. Tariff free manufacturing good encouraged more production to move south of the border. This cycle has shifted production and created large trade deficits for the US. The Trans-Pacific Partnership (TPP), a free trade deal among 12 countries rather than 3 and even large labor pool, strengthens and worsens the above cyle.

Headline: Carrier Begins Job Cuts at Indiana Factory Championed by Trump

Carrier Corp. is beginning job cuts at the Indianapolis factory that became a rallying cry for President Donald Trump because of the company’s plans to shift work to Mexico.

About 300 employees will leave this week as part of a previously announced plan to relocate production of fan coils, Carrier said in a statement Wednesday. A total of 600 jobs will be eliminated during the next few months, the unit of United Technologies Corp. said.

Carrier said it continues to honor a commitment to employ about 1,100 at the gas-furnace plant. The manufacturer agreed late last year to halt plans to send the jobs abroad after a firestorm of criticism from Trump. The move garnered national notice during the presidential campaign after a worker’s mobile-phone video of the announcement to employees took off on social media.


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Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.

Wednesday, July 19, 2017

Are Stocks Overpriced and Ready For A Correction?

News
The Matrix shows us that many of the US indices are out-of-alignment in July. This suggests at least profit-taking and consolidation.  While many highly skilled traders are expecting a pullback that tests critical support, all be the best continue  to be proven wrong sentiment longer term.

The average bull and bear annualized returns for the sentiment model are 30% and -10% in 2017, respectively.  This dwarfs the buy and hold return of 7%.  These number improve significantly risk is adjusted for upside and downside alignment of price and volume.


Headline: Here's why the stock market is not overpriced

The state of the markets as earnings season begins: are we really overpriced?

Earnings season begins this week in earnest, with reports from Bank of America, IBM and Visa, among others. But there is a growing chorus of voices insisting that the market is topping out. The worries revolve around four main complaints: 1) The bull market is eight years old, few bulls have lasted longer and it is reaching the end of its lifespan, 2) The Fed will have a tougher time than anticipated managing the reduction of its balance sheet and increasing rates, 3) Political developments (lack of progress on tax cuts) are already slowing the advance of the markets and 4) The stock market, particularly technology, is overpriced.


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Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.

Bitcoins Novelty Could Turn Competition During A Crisis #Bitcoin

News
Why will the Bitcoins of the world be seen as threat to monetary control? Predictability of human behavior, specifically ego. Those investing (not trading) in gold and silver and cryptocurrencies (cryptos) based on the premise that government will fight for their existence are HOPING, whether they realize it or not, government will turn a blind eye to both as the crisis and finger pointing escalates, likely in late 2017 or 2018. Although cryptos, including the well-known Bitcoin, are novelties, seen as a game of musical chairs by central authorities, their perception will change as price soars. Novelty will quickly turn to competition, a threat for control and dominance by increasing vulnerable governments. This transition likely comes as countries deal with a flight of capital during the crisis that Herbert Hoover described as "capital is acting like a loose cannon on the deck of a ship in the middle of a storm." The desire to 'control the cannons’, a predictable human behavior to look important during a crisis, will likely deem cryptos as money laundering conduits and declared them illegal, literally overnight. If that happens, servers would be confiscated and key admins perp-walked to jail. The Senate is already crafting an anti-terror bill to deal with the exchanges. The Japanese are among the first to acknowledge the message.

Headline: Senate Anti-Terror Bill a Threat to Bitcoin

WASHINGTON – Senate Judiciary Committee Chairman Chuck Grassley and Ranking Member Dianne Feinstein, along with Senators John Cornyn and Sheldon Whitehouse, today introduced legislation that modernizes and strengthens criminal laws against money laundering – a critical source of funding for terrorist organizations, drug cartels and other organized crime syndicates. The Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017 updates criminal money laundering and counterfeiting statutes, and promotes transparency in the U.S. financial system.

“Terrorist organizations, drug cartels, and other criminals are actively looking to exploit and harm Americans, whether by attacking our way of life, flooding our country with highly addictive drugs, or defrauding unknowing victims. The recent terrorist attack in the United Kingdom is the latest somber example of how real these threats are to our country and its allies. We must continue to fight them on every front, and that includes going after the profits of crime that are also used to fuel the ongoing activity of these diabolical enterprises. Our bill updates our money laundering laws for the 21st Century,” Grassley said.


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Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.