Significant Divergence in equity markets and leading indicators
Observable for weeks now, and recently, the divergence is much more pronounced.
What I am referring to are that the equity markets appear to be more and more bullish, breaking out of trendlines; while the leading indicators (TIP, TLT, JNK and inversely VXX) show an imminent deterioration, about to breakdown of trendlines.
The combined US equity markets and particularly the NASDAQ itself is very bullish, spiking up and hard in the last two weeks, extending further from mean.
So, going forward the next couple of weeks, either one of two needs to happen.
EITHER, the equity indexes continue the upward surge and the leading indicators reverse course to align and exceed (and return to be leading indicators);
OR the equity indexes breakdown really hard to converge with the leading indicators.
Watch for the latter, as the leading indicators break down of the trend line and show commitment. Then the equity markets may give a swift reversion into convergence and confluence.
There are many ways to look at this and many more parameters to add in, but keeping it as simple as I would, perhaps waiting and watching for the next couple of weeks might be better than taking a committed position.
Stay safe, keep a watchful look, be ready...
What I am referring to are that the equity markets appear to be more and more bullish, breaking out of trendlines; while the leading indicators (TIP, TLT, JNK and inversely VXX) show an imminent deterioration, about to breakdown of trendlines.
The combined US equity markets and particularly the NASDAQ itself is very bullish, spiking up and hard in the last two weeks, extending further from mean.
So, going forward the next couple of weeks, either one of two needs to happen.
EITHER, the equity indexes continue the upward surge and the leading indicators reverse course to align and exceed (and return to be leading indicators);
OR the equity indexes breakdown really hard to converge with the leading indicators.
Watch for the latter, as the leading indicators break down of the trend line and show commitment. Then the equity markets may give a swift reversion into convergence and confluence.
There are many ways to look at this and many more parameters to add in, but keeping it as simple as I would, perhaps waiting and watching for the next couple of weeks might be better than taking a committed position.
Stay safe, keep a watchful look, be ready...
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.