TLT
German Real Estate looks attractive despite econ slowdownGerman Real Estate has been highly correlated with XLU and bonds while benefiting from flow of liquidity into equities. In previous slowdowns it has performed quite well. At least it has behaved quite predictably where buying the dips around KC and RSI o/s levels proved profitable.
Next Week Trade Plan: $82 Expected Move + Gravity Points + ExtraFor what it's worth, I don't have any Gravity Points identified under the "Gravity Point Very Hard"
Chart Dump this week. See what I see.
Last Week's Post
Other Relevant Charts:
(One Last Rally)
(Interesting Development)
(Kings Crown)
(Extremely Useful)
(Combo Equal-Weight Indice Chart)
(Extremely Useful)
(Should've made it public)
(Semi-Useful)
(Just for fun)
Sector & Indice Trendline Watch:
I use a fan of different trendlines from different anchor points (candle wick, candle body, Day prior, Day after, ect.) and connected them in a similar way to 2015/2016 Lows to capture a more complete picture of the trendline. That way I'm not second guessing if the trend is broken or not because I have all of the possibly variations already displayed. See Below:
Indice:
(Broke?)
(Very Weak)
(Hanging on)
Sector:
(Strong)
(Very Weak)
(Struggling)
(Broke)
(Still Well Above)
Trying to Figure Out Bond Market MovementThe bond market looks like it is reaching it's peak overbought condition in the short term. This might bring some stability to the stock market. I am closely watching the 50 DMA line which is flat and might reverse it's trend to start moving higher. I would sell TLT in the short term and buy on dips. I will watch for a break in the downtrend line I highlighted which will indicate a bullish move to the upside.
The Curve Is Falling, The Curve Is Falling $TLT God bless the legacy financial media because their uselessness is a blessing.
Headline to headline is no way to live through live whether you trade oil or bitcoin. The click du jour is how the 2s/5s yield curve is now inverting, and the 10s/2s are at a mere 11 bps.
I have been one of the largest flat curve-ers out there. Why? Because my process shows why the decelerating in rate in change in both growth and inflation will sink the back-end and the front steepening eases.
On Sept. 6, I wrote in "Cognitive Dissonance: What the Yield Curve Is Saying:"
"A lot of headlines have fluttered across the wires on the 10s/2s yield curve on a continuous path to inversion. Neckties on legacy media continue to say a flat or inverted curve doesn't mean much.
I reckon, given the directional trajectory of both the curve and MVR inflation matrix that the curve is signaling market's expectations on inflation.
Generally, this would make sense given that the steepening from a curve inversion is triggered by the fed's policy stance on interest rates during the end of the cycle."
The concerns about increasing U.S. supply in paper is valid, but the concerns of too much debt issuance over demand becomes "where do I put my money" concerns.
That's likely treasuries, increasingly so as investment and junk credit continue to breakdown.
TLT Short setting upTLT's longterm trend is down (see higher TF's).
The daily TF presents a pullback.
If price can break through the tiny (orange) shelf, we have a nice trade on the plate, at least down to the Centerline (my personal TGT1).
P!
10y yield wants to break down from 3 year rising wedgeNothing huge here, just watching for this trend to break as many others have recently. Major trend breaks = regime change. If this falls out of the pattern here, I expect the yield curve to invert not all that long afterward.
TLT: Bottom's in...Just documenting my call here. I think it may rise 8-10% from here. A significant drop in bond yields awaits.
Cheers,
Ivan Labrie.
Post 2016 rising wedge in 10y yields (log scale)Just another anecdote of how this trades much better using a log scale than a non-log scale. This will likely break out to the downside within the next few months. See my longer term chart for reference.
The bond bear is not here yet.... use a log scaleThere have been a lot of talks of a bond bear market over the past year. That would be a big problem, but it's not here yet. The biggest problem is that too many chartists are using and circulating charts of trend resistance breaking in bonds that do not use log scales. I get that it seems intuitively dumb for a yield chart to use a log scale, but that's how this has traded for the better part of the last 20 years. Trade what is, not what you think should be.
Turns out we haven't yet hit the top channel here, so we're not in a bond bear. It also turns out that touching the top channel occurred every time the fed quit hiking rates over the past 30 years, which preceded the last 3 recessions / bear markets by 1-2 months at least.
Short term, we're in a rising wedge that the bond market has obeyed quite well. If we rise directly to the top of the channel, that would imply a May 2019 break of this uptrend and a recession / bear market starting around mid 2019 into 2020. Who knows how this actually plays out, but I know we haven't hit a true bond bear yet, and even when we do, it'll probably be far less exciting than people want to believe.
SPY 30 min Chart the battle will be won or lost here The infamous inverted h and s will be won or lost late this week or early next...
SPY Weekly 30 Years overall Look #BigPicture #MeasuredmoveThis is a carefully crafted study! I have demonstrated the angles that we will likely see in the future based on what we have seen in the past. Details in the chart... Hope to get 1K views on this
Long TBT (Short Treasuries and Long Rates)Daily TBT shows bull flag and seller exhaustion. Weekly bullish cloud ahead.
All major EMAs supporting the move higher, which means rates going to explode much higher. Bullish dollar $DXY and bearish gold $XAUUSD and miners $GDXJ $GDX
SPY Weekly Chart Bounce Coming soon This Chart compares patterns and bull flags (2012 and 2018). They look very similar! Cheers!
OPENING: TLT NOV 16TH 112/2X114/115 BROKEN WING BUTTERFLY... for a .71/contract debit. Small bet that treasury sell-off is overdone here and/or there will be some risk-off running into mid-term elections.
Metrics:
Probability of Profit: 51%
Max Profit: 1.29/contract
Max Loss: .71/contract
Break Even: 112.71 (no downside risk)
Notes: Will begin to look at taking the entire setup off as a unit at 25% max. You can also look to strip off aspects of the setup, with the ideal goal being to get what remains for free (e.g., strip off the short call aspect at or near what you paid for the entire setup, allow the long call vert aspect to "ride").
Is $SPY / $TLT Ratio Repricing Lower Inflation?U.S. equities bounce from initially being down 15 handles, but volatility is expected. However, is recent move expected? Yes, in my opinion, as markets are ultimately forced to re-price growth and inflation .
Step back from the earnings headlines because that's literally old news. Although Q3-18 earnings growth is up nearly 20 percent, over 60 percent of companies that have reported are seeing negative FX impacts (i.e. rising dollar). There is also a solid concern on Q4-18 negative guidance going forward.
That's not to say earnings will be horrible. Too early to tell, but the rising DXY will impact overseas earnings (remember 2014-15?). Furthermore, late cycle increases in wages and other employment costs will continue to crimp margins.
If we look at D-R-I-P (disinflation/reflation/inflation proxy), the inflect is clear and largely impacted by the commodities and FX components and diverting from yields.
This proxy is important when considering SPY/TLT ratio in terms of "risk-on/risk-off" market mentality. D-R-I-P has a strong intra-day correlation to the ratio r=.78 and intermediate-term correlation of r=.72.
Given this, if we put up the proxy to the test of the TACVOL range, there is a strong probability of a 3.52 to 7.33 percent decline versus 2.5 to 4.92 percent to the upside.
The ratio has been able to work off most of it's oversold move, but another three percent lower is in the cards.
The COT data shows 209,584 contracts net-long of SPX, the second largest position of crude oil's massive 500,000+ contract net-long (bad idea). Compare this to the 30-year bond's net-short positioning of 118,924 contracts.
If there is any disappointments on the macro front, this will get fuglier quickly.
Mid-Term elections and forecast based on game theory - A divide Game theory has the elections outcome pegged, and based on that, this is the market prediction. I have upgraded this AI to include the new chaos theory. Very interesting results and are playing out exactly. Such as "a divide within"
Here's a taste: The democratic party division of the party itself.
When and where?
For more, you can contact me. Now custom game theory runs are available for corporate events, other parties, etc....
The preponderance of evidence: US 30-yr bond yieldsThis is part of a series of charts which I will posting for the reader to make up his/her mind based on the weight of the evidence.
Do note, these are weekly charts which means the implications of which will occur over the next 12, 18, 24, 36 months.
The preponderance of evidence: US 10-yr bond yieldsThis is part of a series of charts which I will posting for the reader to make up his/her mind based on the weight of the evidence.
Do note, these are weekly charts which means the implications of which will occur over the next 12, 18, 24, 36 months.
