First I would like to remind you that the Trade Log has been changed to Trade Log & In-Day Notes in order to post brief market comments along with trading moves. A new note was posted a while ago and as will always be the case, a notice was tweeted @BiiwiiNFTRH with #NFTRHnotes.
Timing being what it is, I was away from my office when the market decided to get really hairy. The media present potentially inverting yield curves (as recession signals) and doubts about the Trump/Xi trade war agreement as the reasons. But the real reason is probably that it’s a volatile market. Duh!
And if our view is correct that volatility is a precursor to change. Ref. the weekly H&S scenario on the SPX. Recall that we are looking for it to grind up and down with an upward bias until time can build out a reasonably symmetrical right shoulder. Here’s the updated chart from NFTRH 528’s Opening Notes segment. A grind fits the build out of a right shoulder well. This was never going to be a breeze because a break above the daily ‘W’ resistance (ref. this morning’s update) would have wrecked the bearish H&S situation. It retains the potential to grind with an upward bias for a few weeks.
However, daily SPX is back below its 200 day moving average so we cannot discount that the whole mess could abort sooner. It will be very important for SPX to recover the SMA 200 (currently 2762) this week or bearish time lines could be pulled in.
As for Treasury bonds, we have been talking about how markets rose with long-term yields and the latest round of “bond bear!” stories. Well, not so much. Not yet.
We have noted that Treasury bonds and the US dollar would be the first receivers of risk ‘off’ bids in a troubled market, but that gold would have its place as well after the USD/Tbond trades got crowded by conventional players. As reviewed this morning, gold is on a new short-term leg up.
So the good news is that if the market is breaking, the gold sector steps front and center (with the caveat that it could also have some issues with the flattening yield curve. But I am wondering if gold is looking beyond the flattening and ahead to the steepening. The yield curve looks impulsive now, as if it could be on a final drive down before halting and steepening.
I am a market player just back in to my office and hopefully sounding coherent to a sufficient degree. Much more to come as we evaluate the markets. They are in motion and that is (IMO) good news. Change comes from motion.