This Week

Into my anticipated turn window, from last Friday to this coming Friday, and with increasing evidence for a correction in equities.

Geomagnetic disturbances perists, making a significant divergence with the S&P500.

Citigroup Economic Surprises continue to fall away, which has historically implied a correction, or sideways consolidation.

Source: Bloomberg

 The S&P500 is out of its upper bollinger band.

Source: Market Anthropology

The Vix is at a level that has recently implied a correction. However, note also that there is a lower historic level that Vix could fall to, between 10 and 15, that was a feature of strong bulls.

Source: Slim Beleggen

 The CS Fear Index is at an exteme high and has tipped over ahead of the market. Both aspects of this barometer have previously led to a correction in equities.

Source: Bloomberg

Dax sentiment is back to the high extreme bullish zone too. In short, the case is building for a correction and the time window is appropriate too. What form the correction or consolidation takes, we will see. Due to the trend change in treasury bonds, money flowing out of the safe haven may buy up stock dips. I therefore don’t wish to short. My favoured scenario is for stocks to consolidate overall sideways for a period, whilst money flows favour the unloved precious metals and miners for a while.

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3 thoughts on “This Week

  1. I track “UUP” the US Dollar index and it is back below both 50 and 250 days EMA again just like September 2010.

    I have added my risk positions accordingly..

  2. Edwin, the UUP ETF has a rollover negative effect. That means over the long term, the ETF is constantly trending lower and lower. Therefore, its moving averages are actually useless. You would be smarter to follow DXY Index or Trade Weighted Dollar Index when it comes to moving averages.

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