April 22, 2017 Leave a comment
Highlight: Overall the picture appears to suggest near term spike in the USD/US bond yields due to geopolitical/financial stress that will resolve to their major trends back down for both with oil/commodities resuming their climb into the summer.
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We cover STORMM signals for the SP500, 10yr Treasury yield, USD, gold, oil, and the VIX with Pring Turner business cycle charts. The charts are arranged first with a STORMM annotation followed by a TMS view and two moving average charts. With a similar time scale its easy to compare signals across multiple charts by scrolling down the page.
SP500:No change: The SP500 recent buy signals for the STORMM indicators and the Renko plus NYAD buy indicators all failed this week as the SP500 continued to retreat. However for the STORMM indicators we still have two buy signals and they are approaching oversold territory. The accompanying indicators are all divergent and this status could be mainted down SP2200. But we don’t anticipate a retreat this large and are looking for support at the FIB 61.8% support zone around SP2280-2300.
SP500 Stratasearch: We’re introduced a new chart and technical indicator set for SPXL developed using the outstanding software from Stratasearch. The accompanying chart at the top of page 2 in our Stockchart public series contains the last 6 months of signals for the SPXL using some of these indicator sets. The best of the set of indicators we’re displaying have the following performance backtest results from 2007: APR: 52.17%, Ave Trade: 11.79%, Ave Win%: 47.74%, Ave Loss%:8.19, Pct Profitable trades: 35.71%, Num trades:42, wins:15 loss 27. Stops at 3,4, and 8%. Some of the other indicator combinations produce a more profitable number of trades but at the expense of yearly performance. Stop loss levels are key to avoid significant drawdowns. We are currently exploring a combination of tactical asset allocation (momentum strategy) across a set of 10 asset classes with optimized Stratasearch signals to determine performance characteristics. Results will be presented in the future. As with all our indicators, the signals are for instructional purposes and not presented as advise to buy or sell a security.
SPXL: This indicator after a -1.7% retreat has generated a second buy signal at almost the identical price level as the first.
Europe: The STOXX50 STORMM indicators generated a buy signal this past week that is not yet supported by the TMS or Renko charts.
SP500:Long term technicals: The set of charts are a collection of classical indicators that are valuable on a long-term to mid-term time spans and have been key in calling key tops and bottoms over the last 15 years.
Weekly SP500 (EOW 4/22/17): Buy: All the weekly indicators are on a buy signal for the weekly SP500.
Monthly SP500 (EOM- 3/17): Buy All the monthly indicators are on a buy signal.
US 10 yr Treasury bond yield: Bond yields on the STORMM indicator chart generated another rising yield signal that is not yet supported by the accompanying charts. This signal is suspect but we are going into a volatile week for bonds with the US debt ceiling approaching. If appears the underlying trend for bonds is turning to declining yields (see weekly / monthly charts below) but some short term pops are possible.
TNX weekly (4/1/17) Rising yields: However, this charts indicators are starting to top out and approaching a key inflection point for bonds.
TNX monthly (3/17) Rising yields: Similar to the weekly chart, these indicators are topping out and approaching a key inflection point.
USD: A very rare fourth STORMM buy signal for the USD developed this week and is supported by the near term rising in US bond yields that is developing. A bad development for inflation and commodities
Oil (and commodities): From oversold STORMM indicator levels oil/ commodities have quickly move to overbought levels and are now retreating. However, the STORMM indicators at oversold suggested a minor retreat then followed by new highs.
So overall the picture appears to suggest near term spike in the USD/US bond yields due to geopolitical/financial stress that will resolve to major trends back down for both with oil/commodities resuming their climb into the summer.
VIX: No change: The VIX has spiked through all three sell signals again and is likely nearing a top predicting a bottom is approaching for equities.
Pring business cycle:No change: Bonds have broke below their signaling 250dMA while stocks and now commodities are above their 250dMA. Inflation and commodities appear to be strengthening which points to a stage 4 in the Pring business cycle. Stage 4 is a late stage but a normal part of the Pring business cycle divisions that is followed by stage 5 where strengthening inflation eventually has a negative impact on stocks (trend below their 250dMA).
Pring deflation: inflation:No change: This indicator is now crossing by multiple measures into a deflationary trend due to the rising US bond yield and USD movement. This growing trend will put pressure on the FED to continue its rate increases beyond the all anticipated March rise.