Take a look at the yield on the long bond. Take a listen to all those formerly loud Treasury BOND BEARS!!! Now all you hear are crickets.
So are we now risk ‘off’ enough for the yield to make a low? Has the whole cacophonous mess been shut up? Do people still think they understand the Fed and its motivations?
Look, I don’t fully understand the Fed myself, but I do have some logical (with a hint of tin foil) thoughts on the whole ball of wax. These thoughts were put down in a subscriber update this morning and I may reproduce that update, or the majority of it, publicly.
For now, let’s note that TYX is at what could be a support area if you believe a yield can have chart support. The blue arrow was the measurement of the yellow shaded pattern and the Fed surely did not want to see that come about.
Meanwhile, I never imagined that SPX might actually have a chance to hit Target #1 in 2018. Frankly, I thought we might have to wait through a grinding Q1. SPX would have to continue to crash mightily from here for that to happen.
If it were to crash I’d cover my SPY short (which was increased on yesterday’s pre-FOMC rally) and think about buying stocks. I don’t know that 2100 is an ultimate bear market low (I doubt it), but it could spur a hell of a recovery rally in 2019. Look at how lame that right shoulder is after the big RSI divergence at the Head. What a mess. The market is in free fall and I’d love to get it over with sooner rather than later. We will see.
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