Market & Macro Indicators

It’s one NFTRH segment among many, and certainly not the sexiest of them.  But it is among the more important ones in my opinion.  I don’t mean to be cavalier (see the end of this post) about the risks built into the markets and into the system.  I started 12 years ago with systemic risk a primary reason, and that has not changed; it’s intensified.  But functionally, we need to put the tin hats on a hook and operate daily, weekly and monthly without letting emotions take over.

Hence the indicators.  If they go bearish along with market technicals, we’ll catch it, hopefully early, as we usually do with market changes.  We got bullish months ago because that is the way the TA and the indicators went, and I remain un-bearish at this time.

NFTRH does all the charts that the TAs do.  We do all the macro that the macro fundamental guys do.  But we also do sentiment, straight economic data and indicators galore.  The current ‘not bearish’ view on the market is because the trend is the trend and it is up and the indicators have not yet done anything alarming.  But the messages that they give going forward will be right there in the evaluation mix along with the technicals (we have firm parameters at which the corrective activity – with the exception of our fair haired boy, the Semi sector, which made new cycle highs – would be signaled to be over).

A final note; no single segment in NFTRH is a be all, end all.  So pardon me if the writing has some wording and assumptions that weekly readers would get, but others may not.  Anyway, fwiw…

Market & Macro Indicators (NFTRH 415)

Equity Put/Call ratio continues in its 2016 downward trend. This has supported the bullish view ever since we identified the breakdown in the previous CPCE uptrend. The market is doing its part thus far, by holding key support.

equity put/call ratio

VIX held support last week and in line with the idea that risk will be ever present if this market goes manic up, we can expect periodic flare ups like the 3 orange dots that have cropped up during 2016 alone.

vix and s&p 500

Junk bonds have held the highs in nominal terms and also been firm for most of 2016 in ratio to higher quality bonds. This is and has been an ongoing signal that a manic bull phase can erupt. Again, I don’t make the charts; I just pull them up every weekend, shake my head just like you and then tell you what I think they mean.

hyg, junk bonds, investment grade and treasury bonds

Commodities continue not to show a pulse vs. the US stock market.

gcc vs. spy

Yet the highly speculative TSX-V made a bullish signal, which is being tested now.

cdnx vs. spy

The same signal is easing a bit in Canada.


While the US inflation expectations barometer decides whether to hold support and break above the trend line or fail. Right now, it’s in process to one or the other.

tip vs. tlt

Silver-SPX maintains a bullish stance, though in consolidation.

silver vs. spx

Silver-Gold ratio (SGR) and CRB should eventually correlate. SGR is on a bullish trend change signal until it no longer is. That is a bullish underpinning for commodities, the case for an inflation trade and most asset markets with the exception of Treasury bonds.

silver-gold ratio and crb

Nor would a rising SGR (declining Gold-Silver ratio) be a positive for USD.

gold-silver ratio and us dollar

BKX and Gold each continue to hold support. Both items would probably benefit in an inflation phase, if it results in rising rates and yield curves.

bank index and gold

Said curve is not however, rising in any kind of trend.

yield curve

It bounced last month. Was that a start? To be determined.

yield curve

Here are the nominal 10’s and 2’s. The markets have mostly been on the deflation theme after FOMC packed its bags for its break until November. FOMC fretted again about inflation not being quite high enough and the market has hinted that it believes them. But the 10 year yield bears watching in its little 2016 trend line break.

10 year yield and 2 year yield

LIBOR and TED are RISING!!!! We all gonna die!

libor and ted spread

I don’t want to make fun of things that should be indicating systemic stress. But I do want us not to panic and take the bait for every disaster in a continuum of Euro Crisis! → Fiscal Cliff! → Cyprus! → Greek Debt Meltdown! → Ukraine/Russia! → Bird Flu & Ebola! → NIRP! → Terror Attacks! → and drum roll please… BREXIT!!!!

The macro markets are high risk because they are being remotely managed, whether by Jawbone or action, by policy makers the world over who have abandoned any moorings to what we used to call sound theory and practice (in my opinion).

But we need to guard against the line of thinking that goes “wow, this is really screwed up, we are in deep trouble and this is gonna be really BEARISH!!!! That is not how markets tend to work, especially post-2011 with everything on hyper kinetic information overload. It is these very stresses that often help keep a bull mania climax in play.

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