There is no bottom in the stock without a bottom in the bond
My Dashboard on Tradingview
www.tradingview.com
where I am monitoring the entire bond market in the world with my magma indicator, country by country.
When investing for the long term I first look the bond market before leaping in the stocks.
There are few simple and important rules to follow in this market.
1. Higher Bond yields = Lower Bond Prices = Bottom in the bond market is more bottom
2. Short-mid term bond yields is closing to long-term yields (example 2-Years yield = 10-Years yield) = This means flattening = not good for long-term investment, stay alerting for your paper profits.
3. Short-mid term bond yields is greater than long-term yields (example 2-Years yield is greater than 10-Years yield) = This means inversion = not good, imminent fear of recession (remember: stock market does not perform well during recessions)
4. Short-mid-term bond yields is less than long-term yields (example 2-Years yield is less than 10-Years yield and going lower) = That's fine, economics sounds good for long-term investments
What I see now: United States, Canada, Brazil are countries with the most prolongated inversion areas (highlighted with red circles in the figure above).
5. More prolongated inversion = not good, even more.
Flattening areas (yellow circles) have to be carefully monitored.
Few examples currently are showing good news (green circles) : Japan long-term and mid-term yield curves are fine and in the good direction. Same as in Australia.
Flattening
..an attempt to showcase the flatteningFlattening for the close. Getting a couple of questions re; flattening after the hints in previous idea, for those following 10s30s you will notice the test of 55/54bps is underway.
↳ The latest breakdown is implying we are at the minimum here in an ABC expectation leg towards support
↳ Inflation readings will be key to drive this one, this is signalling a dangerous environment for equities and risk in general going into September.
↳ To the other side, buyers will need to break through 11th May highs to call for reassessment in the flattening view.
ridethepig | US10Y testing resistanceA timely update to the US10Y Yields chart as we approach key areas. The 1.35% pivot level in the very short term is our line in the sand and will define which battlefield we will play Q3 on.
↳ The waterfall lows from 2020 started the next five wave impulsive sequence to the topside, it will take years for the moves to unfold but critical to understand our long term direction (higher yields).
↳ Typically we will see ebb and flow, particularly in summer months. Now with 1.35% & 1.45% the key resistance areas defined and ready to monitor, all we need to track is for a sustained breach above as will imply buyers are in control and demand reassessment in the view that a base is already in .
↳ Here actively tracking for one more leg lower towards 1.00%, it should be enough to unlock the pressure valve in USD one more time before we see the next leg lower in global equity markets in October (more on this over the coming weeks).
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