CMT_Association

CMT_Association

As discussed in part two (prior installments linked below), the duration mismatch between LQD and HYG renders the ratio useless as a tool to assess credit distress or changes in investor preference. Credit ETFs, must be compared to a duration matched ETF, Treasury security or index to be useful. There is also the difficulty in comparing spreads across investment...

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In part 2 I take a quick look at high yield corporates and describe a common mistake made in using ETF ratios to monitor changes in credit risk. Part one and an earlier piece that described how to use the TradingView platform to monitor secondary market credit spreads are linked below. If there is any one thing that will produce a Fed policy a pivot, it is...

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Since credit has far greater potential to create systemic issues than does equity, corporate credit conditions are much more important to the Federal Reserve (Fed) than changes in equity prices. If you have interest in macro, monitoring and understanding the basics of corporate credit is a must have skill. If there is any one thing that might actually cause a Fed...

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All traders are different but I personally find it difficult to use standalone channels to consistently initiate profitable trades against. Not the least of the problem is that the channel continues to either rise or fall, making a secure place to hide a stop above/below more difficult. But I find them particularly useful in three aspects. The first, and by far...

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Before we get started on trendlines and channels I want to share a quick thought on the current market environment and how, at least in my opinion, the technical environment has changed. I believe that the weight of the evidence suggests that we are in the early to mid-stage of a primary bear market. If that is the case, momentum and sentiment extremes,...

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In the frustrating attempts to determine which rallies may represent the end to an overall market decline, one has to recognize, particularly in the throes of a bear market cycle, that “All Advances are Not Equal” even as all stocks may rally together with the market. Within any market trend, there will be rally phases. However, rallies may not carry all stocks...

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In part 2 we discuss how to construct and utilize sloped trendlines (TL) and Channels in order to better understand the ebb and flow of supply and demand. Like most other charting techniques understanding supply and demand and its relationship to trends and channels depends on you staring at hundreds and thousands of bar charts. Unfortunately, there just isn't a...

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This will be a multi part series on trendlines and channels, what they represent, how to draw and use them, and how I design trades around them. For the sake of simplicity this series will focus on uptrends. Importantly, the principles are roughly the same for both uptrends and downtrends except that downtrends often develop more quickly. I see many TL...

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Seasonalities are regular and predictable patterns that recur every calendar year. Every industry exhibits unique seasonal trends that are based on fundamental drivers. The best-known seasonal drivers include harvest periods, the timing of interest payments, weather, and investor sentiment. At certain times of the year, tax and balance sheet deadlines, annual or...

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Even in retirement I scour hundreds of weekly and monthly charts. When I come across promising setups, I drill down to see if there are chart elements, price volume relationships, or other factors that might either preclude a trade or tip the odds heavily in favor of a particular outcome. Most of that process is covered in the "Potential TLT inflection and Notes...

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Trend-following is the bread and butter of CMTs worldwide. Identifying primary trends during the nascent stage of said trend can be difficult but the real p/l is generally made during the meaty part of the move, for what is known by Ellioticians as the 3rd Wave. One way in which technicians can identify throwbacks/pullbacks in a primary trend for re-entry is by...

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In January I reviewed the long-term technical and fundamental positions of the big four: Bonds, Equities, Commodities, and the Dollar. Those pieces are extensive in terms of both fundamental and technical outlooks and are linked below. January 2022 Observations: Bottom Line: It’s a range trade until it ain't no more. Impetus for a range break could be provided...

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Trend Following and Growth Investing In Technical Analysis (TA), trend following is the equivalent of growth investing in Fundamental Analysis (FA). Further, in TA, mean reversion analysis ("overbought" and "oversold") is the equivalent of valuation ("overvalued" & "undervalued") in FA. In both trend following and growth investing, the focus is on finding the...

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One of the attributes of technical analysis is that it offers consistent tools to define and manage risk. The current SPX daily chart offers good illustration. -The current rally is maturing at a significant resistance level created by prior support and resistance levels (February, March, and June). I think of this as a polarity zone. -This is the polarity...

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Commodities: In January I reviewed the long-term technical and fundamental positions of the big four: Bonds, Equities, Commodities, and the Dollar. Those pieces are extensive in terms of both fundamental and technical outlooks and are linked for your review. January Conclusions: The trend from the pandemic low is higher, mirroring the economic recovery. But,...

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In January I reviewed the long-term technical and fundamental positions of the big four: Bonds, Equities, Commodities, and the Dollar. Those pieces are extensive in terms of both fundamental and technical outlooks and are linked for your review below. I made two particularly important fundamental observations: 1. Both policy vectors (Fiscal and Monetary) are...

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Relational Technical Analysis™ or “Relational Analysis” is my contribution to the continuing evolution of technical analysis. It helps me understand who is in control of the price action of stocks, indexes, ETFs and more. It can provide a leading analysis for trading or investing in any chartable trading instrument, even cryptocurrencies. Relational Technical...

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What started as a short post describing a potential, but dangerous, weekly inflection in the TLT chart has evolved into a much longer discussion around process and how I organize and view the basic information. As I wrote, I realized how difficult it is to describe process, particularly the more nuanced aspects. 40 years spent staring at literally millions of...