BTC and JNK/TLT ratioI plot BLX (which is BTC) along with JNK/TLT ratio.
JNK/TLT ratio is (Junk Bonds ETF) / (20 year bond ETF ) . This ratio can serve as an indicator, to show if the market is loving risk or loving safety on a macro level. Risk on to risk off ratio. You can see that the JNK/TLT ratio correspond with market bull & bear cycles. Notice the JNK/TLT tops form a trend line, and have some correlation with BTC tops - though not to the exact day or week.
I used the green box to mark a kind of fuzzy area, where the JNK/TLT did not top at the same time as BTC.
Notice the end. Will it touch the trend line as BTC tops out? Or Is it possible it plays out like the green box range, where BTC tops, and the JNK/TLT dances along underneath the trend line a bit further, because the stock market hasn't finished its run yet? Or did BTC top at $69k already? Make your own conclusions. I'm in alt coins. :-))))))
Green lines indicate JNK/TLT tops and red lines JNK/TLT bottoms. I then drew them up to BTC looking for correlation.
I learned this chart from "Game of Trades"
JNK
Leading Indicators Reversal in ProgressInteresting... in the last couple of weeks, as the Leading Indicators signaled a retracement, it appears that it may be time for a technical bounce...
JNK broke down as expected, and exceeded target. Last week's candle had a long tail recovery, and this current week is forming a rebound.
MACD still in bear territory.
IWM, DJT and VALUG all seemed to have retraced hard, and bounced off a support. MACD crossed and still in bear territory... may not be over. sus.
TIPS failed a support and does not seem to be recovering, not bouncing for the matter. MACD appears to be recovering though. This one is rather odd, so I would just note and leave it for now.
TLT is not bullish as one would expect it to be. In fact, it looks bearish, which is favorable (bullish) for the equity markets.
VIX failed a solid break out and looks to be finding 16 again, signalling the interim volatilty is over and more bullish markets to prevail.
/HG Copper futures are held in a tight range and appear to be recovering this week - if it can hold steady and break out. MACD is not yet bullish.
Overall, the leading indicators are signalling an interim bottom. perhaps a larger than expected rebound should follow in the coming weeks...
Leading Indicators not bullish, slow deterioration observedReviewinig the Leading Inidcator Weekly panel...
The JNK has a Sell signal, retraced and may break down to a lower low target, as previously expected. Not yet happening, but with a lower high, the bias is closer to the downside.
The IWM (Russell 2000 ETF) also has a Sell signal and lower high. Waiting for a lower low confirmation with a break of support.
The DJT is also similar.
The Value Line failed to close the recent gap, suggesting downside bias.
The TIPS clearly broke down through two support levels with a system Sell signal. So this one committed.
All the above have MACD technically bearish bias.
The TLT is oddly breaking down too. No comments about this at this point of time. Just unusual.
The VIX is also unusually complacent, being <20. Technically seeing a possible spike some time in the next two weeks or so.
I just added the Copper futures in the panel... according to Russell Napier, Copper futures is also one of the leading indicators we can use. For now, it is ranging and not committed to any trend.
I hope we get some committed trend soon!
Stay safe!
Leading Indicators point to more the obviousLeading Indicator panel update:
JNK - the topping pattern continues to play out for JNK, looking for a lower low, after the last lower high.
IWM - The Russell 2000 ETF failed a breakout late last year, and is about to break down of a support given the bearish weekly candle.
DJ Trans - a system Sell signal, and likely downside off the Dark Cloud Cover pattern.
Value Line - Similar outlook to DJ Trans, with bearish candlestick that failed to close the gap.
TIPS - Totally bearish Marubozu that broke two supports, with MACD bearish. This market forerunner is not boding decisively bearish.
TLT - Instead of the expected bullishness in a bearish market, we see TLT being dumped with a gap down marubozu.
VIX - still low, coiling to spike perhaps?
ES1! - The S&P500 futures had a Bearish Engulfing last week... indicative of a follow through downside in the weeks to come.
So... the leading indicators overall are bearish, and getting more so, with the S&P500 just became indicative of some real retracement potential in motion.
Leading Indicators are BURNTAs forewarned, the Leading Indicators were previously pointing to a burn out, and now half of the leads are burnt.
JNK and VALUG are bearish, as are TLT and VIX indicating bearishness.
IWM, TIPS, and DJT have failed any bullish indication, skewing towards bearishness.
The S&P500 futures are at support now... likely to break down, even for the beginning of a month. Overwhelmed by the "shock" of a new variant, perhaps it is time.
IMHO, Omicron is a precursor... it should be mild, but its existence is indicative of the next wave. So, not to be ignored, and especially not to be forgotten. This is like Nature's forewarning of 2022.
Stay safe!
Leading Indicators panel point to a burn outLooks like the S&P500 should be running out of steam soon, based on the panel of leading indicators which most are about turning.
JNK just about broke down and topped out a pattern.
Russell2000 and the broad market Value Line failed a breakout.
VIX and TLT are about to break out.
The ES futures weekly chart have indecisive candlesticks for the past two weeks.
While not a bear trend, a likely technical retracement due...
Heads up
Credit - The Second Wave - EvergrandeIdea for Credit:
- Stocks had a bit of a reprieve as China's collapsing property firms were halted for 2 weeks, and China's markets had gone on holiday for Golden week.
- Stock market had an unwinding of hedges last week, but are things really 'Back to Normal'?
- The bond market does not think so, and seems to be presaging more drawdown to come.
- EM High Yield has been in capitulation, while US Corporate bonds and HY are accelerating their declines.
- High Yield Spreads are about to breakout.
- This is a problem that has not simply gone away, but rather will only get worse.
- Nikkei had even erased all losses of the year in 2 weeks, then lost them again in 2 weeks more, to continue its bear market:
- Remains to be seen how far-reaching the effects will be on China's 5T property market. The drag on global property market is real:
More to come on that later.
The stock market has its best days in bear markets as volatility increases, and this is really telling of the situation. I think we are already in a global bear market and recession.
110 1911 222
GLHF
- DPT
Rotation Back into Junk Bonds & Large Caps Q4The JNK/TLT ratio chart visualizes investors' position in greed and safe bonds. An increase means more greed in the market, corresponding with an increase in equities. Based on where we are, I am expecting one last run in the stock market, reaching the top of our resistance trend-line. I have added a fractal to support this thesis.
$JNK Keep an eye on this important support levelKeep an eye on High yielding Junk bonds. A break below the all important horizontal support level @ 108.60 could be a major sign of risk off. Not only is this an important horizontal support zone technically, but it is also where we find the rising 200dma. A break below this level will be quite a negative for risk on assets
S&P500 - About time for a proper retracement??Am just looking at my panel of leading indicators, and besides the S&P500 ES1! daily chart looking a bit stalled with MACD turning down, the Russell2000, DJ Transports and Value Geometric Index are already leading down. Key levels to breakdown are in red circles.
Some others like the High Yield Bonds and TIPS are still holding; while the Treasury Bonds are being snapped up (Risk Off mode)
Volatility is low, waiting for a breakout.
Looks like a storm is brewing...
Volatility - Do Not Resuscitate - Evergrande (VIXplosion)Idea for Macro:
- Free money is cut off at the source. China Credit Impulse turned negative > Evergrande is first to fall > Overseas investments downsized > widespread effects.
- China was the only productive economy in 2020 > driver of global economy (60% importer of oil).
- CN30Y is closely correlated to CCI > leads US30Y > leads US risk assets.
- Chinese Central Bank POC draining liquidity from the system (Injects 10 bn yuan via RRP while 30 bn yuan expires).
- China HY leads down > US HY/Junk goes down > NDX goes down:
- Currency showing strength:
When you see currencies, bonds, and equities rising together, it means normal correlations have fallen apart. Typical before a crash/crisis type event.
CCI is the leading indicator.
Will see a VIXplosion.
GLHF
- DPT
Leads telling that equity markets (S&P500) are in trouble!A scan of my leading indicators show that 4 out of 4 have topped out and are in clear reversal/retracement mode. Candlestick patterns and technical indicators suggest so.
While this is happening, we see more all time highs being clocked on seasonally low volumes.
Clearly something is amiss and divergence is about to converge...
CAVEAT EMPTOR!
No V Shape Recovery Coming - I'll Give it Til FridayI don't believe this is going to be a V shape recovery like we say in December of 2018. I will give it until the end of Friday. At most Monday before we break out of the rising wedge and sh*t hits the fan if not earlier.
The 4hr is still on a very healthy uptrend, so this doesn't mean we can't go higher in the short term here. There is a lot of confluence in the 280 - 285 level, in addition to the weekly EMA resistance being right above us which leave me to believe we may be very near the top. Especially if the 4hr doesn't break up higher soon, that would be a big red flag.
Furthermore, earnings are coming up and in all likelihood they are going to be ugly and will dominate the news cycle driving prices down.