No Tape For The Skittish
Not surprisingly things have been rather volatile across the board. This has been no tape for the skittish, to say the very least. On the currency side for example feast your eyes on some extended candles on the EUR/USD and USD/CHF – everyone gets some today.
In case you are wondering – yes, we may actually get our first step into a VIX sell signal today (yes that’s relative to equities my dear noobs). If you are confused about the rules then please consult our handy cheat sheet.
The spoos show us in mid-air and the very next resistance looms near 1356. This could line up just nicely with a confirmed VIX sell signal, but let’s not anchor our minds like that. It’s very much possible that momentum overwhelms the signal – so let’s be cautious on the bearish side.
On the weekly we are now above that NLBL – that’s bullish. Even more so now that we have reversed that monthly NLSL. Admittedly we have nine more sessions to go this June, so let’s revisit this one as we get close.
We are above our 1330 volume hole which is bullish as it now ideally should serve as support. If we can overcome daily resistance near 1356 we ought to be good to continue higher. However – yes, there is a however – I have a few charts that are starting to concern me. Please step into my lofty summer lair:[amprotect=nonmember] More charts and cynical commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
So the proverbial fly in my bullish ointment is what I’m seeing on the treasury side. I am starting with the ten year as that’s usually my guide. I do take note when I see a divergence as they traditionally move in unison. Yes, it does detach a little sometimes but in general they are in sync. When they move in opposite directions I get a bit antsy.
Here’s the 5-year – same idea.
The 20-year – also going sideways.
The 30-year is the most bearish. And divergences have been a good play at recent.
Finally here’s a ratio between the 10Y and the 30Y to average things out a little.
Bottom Line: As you know I don’t play correlations, so let’s not jump to conclusions. Maybe this reconnects and we see yields follow equities higher – at least a little! Short term this probably has little impact on equities but medium term I am not very excited about a long play on the equities side right now. Maybe if/once we push above 1356 – in the end I will never argue with price. But consider yourself warned – things are looking a bit iffy out there. Proceed cautiously.[/amprotect]