A few charts catching my eye upon today’s close…
The long-term T bond fund has popped back to a thick and notable resistance area after the ‘rising interest rates’ mini hysteria to begin the month.
10yr yield minus 2yr yield, AKA the yield curve, continues to consolidate downward but has not yet broken down.
TIP vs. TLT is much the same. The implication will be inflationary if both of these hold up and rise again. If on the other hand TIP-TLT breaks down but the curve rises, the implication is systemic stress with a probable deflationary impulse. If TIP-TLT stays low or drops and the yield curve flattens out or drops, Goldilocks comes back. I don’t expect her just yet.
The S&P 500 looks like it is in a bear flag after the hype fest that drove it up to just about fill the gap after FOMC. Our targets remain lower for the short-term, while the long-term trend is still bullish.
Gold continues to be plucky in its hold of support. 1300 is important, but there is more support well lower (that we view using weekly charts and moving averages) that can be tested without breaking the bull market. So if it does lose this area, don’t let the bearish geniuses who will emerge scare you too much.
Especially since this weekly chart is still on its big macro signal change.
Which continues to paint the gold stock correction as a buying opportunity. I am trying my best to be patient because the best support, which is the product of several data points over short and long-term time frames, is lower (details of the whys, what fors and interim wiggles are for NFTRH, but think SMA 200 by this chart).
I’ll drop in a plug for NFTRH and note that we caught the first bounce after the big drop in real time. We then projected the bounce target, which held as resistance, projected another bounce last week just before the FOMC release, advised another target and saw it hold as resistance prior to the current downturn. Not bad. I will say though that while my no brainer downside target still looks good and appears to have a good probability of being hit, the green channel or bear flag has a wide range of ups and downs that could play out first; roughly 230 to 260.
Moving on, we’ll close with a chart of Natural Gas, which is in a cute pattern. The neckline was tested on Thursday, but so far it is holding up.
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