041319 Weekend update

Highlights:   Inflation indicators starting to move – details at STORMM Blog

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 STOCKCHARTS: STORMM public list.  With a similar time scale its easy to compare signals across multiple charts by scrolling down the page.

SP500:  The SP500 has followed through a bounce after a minor retracement as our last set of indicators forecast.  The indicators are rising to overbought territory and we’re watching to see what the next signal will be.   The key test now if breaking the previous high from Oct’18 at 2930.  This coming test will support or invalidate the larger head and shoulders formation discussed previously.  More important is the severity of the next decline which signals or rejects that we’re still in bear market.

On a larger view the SP500 is tracing out a head and shoulders formation and we’re currently on the right shoulder of that formation.  The left shoulder is the early 2018 peak, the head at the Sept ’18 high and now the right should formation is ongoing.  The neck-line connects the early 2018 lows with the Dec’18 low and requires a substantial drop in the SP500 to confirm a break of the neckline – so we see this technical as a low probability for now.  – TO BE TESTED SOON.

SP500:Long term technicals: This 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.

SP500 yearly A new monthly chart that is a collection of several indicators with an explanation below the chart.   Nearly all indicators on this chart except the MACD support a continuation of the 2019 rally.

Zweig breath thrust chart:  Is on buy from 1/1/19 and we’re expecting a pull back test in the next 4-5 months from that signal.

Weekly SP500 (EOW 4/13/19): 2 buy :1 Sell; A split decision on the weekly charts but overall a buy.

Monthly SP500 (EOM- 3/19) 2 Buy: 1 split;  The monthly indicators have improved and we now have two on a strong buy and one chart with a split decision – on balance a buy signal

VIX: The VIX buy signal from last week failed at mid-channel and the VIX is now crossing the lower Bollinger Band – setting up for another buy signal as equities rally.

US 10 yr Treasury bond yield: No change:  The STORMM indicators remain on a strong declining yield signal and their recent oversold levels signal that there will be a slight uptick in rates to be followed by a renewed decline.  Not a good sign for equities.  All the accompanying indicators align with the STORMM signal for declining yields.

We’re halfway through the current forecast for rates. 

TNX weekly (4/13/19) Declining yields:  The weekly indicator set is on a declining yield signal.

TNX monthly (3/19) Declining yields: The monthly yield chart is now fully on declining yields.

USD: No change: The USD generated a STORMM sell signal on 4/1 that is not yet supported by the accompanying charts.  But given the US bond yield forecast that is broadly supported by all its indicators, we accept the current USD forecast for a decline near term.

Oil (and commodities): Oil and commodities are on a buy signal and with the USD forecast for a decline we anticipate continuation of the oil / commodity rally.

Pring business cycle: Advisor Perspectives The Pring business cycle graphs now has all three elements above their moving average signal line with commodities crossing to the plus side recently.  This progress the business cycle phases described by Pring from two to three and moving out of the economic contraction of the last few months.  The next important move is a retest of the 250MA for commodities to confirm the new signal.  In stage three inflation sensitive assets should start to perform better.

Pring deflation: inflation:  This indicator is below its 200 dMA but on the verge of generating new signal of inflation.

 

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