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Bonds Not Playing Along -- So What Gives?
By Mike Larson
I’m a bond guy. I’m not afraid to admit it. The action in Treasuries, or emerging-market debt or even municipal bonds may sound boring to some people. But I find that fixed-income markets often provide early and accurate information about the economy, not to mention the next major moves in stocks.
So with that in mind, what gives with Treasuries here? The Dow Industrials jumped almost 500 points at the end of last week. The Powershares QQQ Trust (QQQ) jumped to within a couple bucks of its summer high.
But 30-year Treasury Bond yields have barely budged, and are still holding firm in the 2.85%-2.9% area. Moreover, the 5s-to-30s Treasury yield spread actually shrank in the past few days … and the 2s-to-10s yield spread hasn’t been able to get off the mat for the past few months.
These are the exact opposite reactions you’d expect to see in bonds from an easing in policy — which is designed to boost growth and inflation after all. Stated another way: If bond investors really believed that yet another round of global QE would succeed in boosting economic prospects, they’d be selling the heck out of bonds. They’re not. That tells me they know it’s going to fail just like every single previous round did.
While I’m highlighting market oddities, I’d note that natural gas prices plunged to fresh multiyear lows in the past couple of days. Crude oil also dropped back below $45 a barrel.
That’s certainly not the kind of reaction you’d expect from another economic shot in the arm from policymakers. Nor is it a positive for the credit quality outlook, given investor worries about the ability of energy companies to service their large debt loads.
I suppose I could also point out that the broader Russell 2000 Index is barely moving at all, despite the surge in mega-cap stocks. Then there’s the Dow Jones Transportation Average. It remains far below its previous high, which was set all the way back in November 2014.
Bottom line? I’ll be the first to admit I was surprised by the magnitude of last week’s rally. But it’s clear bond investors aren’t buying the euphoria yet. Unless and until that changes, I remain wary of risk assets in general … and many stocks in particular.
What do you think? Are bond investors on to something? Or am I just worrying about nothing here? Do new lows in natural gas, or ongoing weakness in crude oil prices, concern you? Or is the strength in tech stocks and big cap names enough to keep you “long and strong” the market? I’d love to hear from you at the Money and Markets website when you have a chance.
I hear ya Jahvik and agree. There is more to go, but the risk levels are very high. In other words, this condition isn't for everybody. This a market for the adept at short term and quick trading.
$NYMO is currently overbought and many a short-term trend change start from these high $NYMO levels. Next few days will be very telling.
Not a Good Sign When C Fund Shows on This List
http://online.wsj.com/mdc/public/page/2_3022-mflppg-moneyflow.html?mod=mdc_uss_pglnk
GM TFN, Thanks for the fresh charts.
I noted the MFI trend has a negative divergence with the price trend in both the C and I Funds. This suggests both funds are in distribution mode.
:D :D :D
Since I've received no feedback from the replied to message, I'm assuming you all can see the link.
Those who sold in May are looking to return to stock market
http://www.marketwatch.com/story/those-who-sold-in-may-are-looking-to-return-to-stock-market-2015-10-02?link=MW_popular
The Bond Market is SCREAMING Louder Now. Please Listen.
Check out these links guys:
http://www.moneyandmarkets.com/bond-market-screaming-louder-now-please-listen-73576#.Vg741npVhBe
http://carlicahn.com/
Request Feedback from a Couple of Nonsubscribers to Stockcharts.com
Does this link resolve for you?
http://stockcharts.com/articles/decisionpoint/2015/10/swenlin-trading-oscillator-and-short-term-volume-oscillator-suggest-more-upside.html
C Fund Comments for 22 Sep 15
C Fund is in a high-trending mode for this weekly candlestick at the chart below. The C Fund's ADX is 28.3 and rising. This implies to take my hints from trend-following indicators. One of my favorites is the 8-week EMA of price.
When C Fund can muster enough momentum to have a weekly close > its 8-weeek EMA, then I'll consider C Fund for a heavy long.
Plan to remain patient until this condition triggers or the ADX starts to trend lower. Bottom line is I'm thinking a bottom isn't in until a trend-following indicator like EMAs or Parabolic SAR goes into buy mode.
NYJ for week one. Thanks
You are welcome drive :)
hulbert Belives Stock market bulls are playing with fire
http://www.marketwatch.com/story/stock-market-bulls-are-playing-with-fire-2015-08-18?link=MW_popular
McClellan sees stocks set up for ‘ugly decline’ as early as Thursday
http://www.marketwatch.com/story/market-timer-tom-mcclellan-sees-stocks-set-up-for-ugly-decline-as-early-as-thursday-2015-08-17
Those Pesky Fundamentals and Valuations
http://www.telegraph.co.uk/finance/11805523/Doomsday-clock-for-global-market-crash-strikes-one-minute-to-midnight-as-central-banks-lose-control.html
Bonds Sending Smoke Signals
http://www.moneyandmarkets.com/bond-market-screaming-stocks-toast-listen-72763#.Vc4mkur75bN
Mr. Market Answered Clearly
Both trends now in agreement.
#msg-115971136
Update from Coolhand
**********************Coolhand Information Alert – 8/12/2015*******************
This is an information alert only. I am not making any changes to my current TSP allocation.
Futures are pointing significantly lower for Wednesday’s open. With China rattling markets for a 2nd day in a row, many money managers are not going to sit in stocks to see what happens next. So the market appears ready to begin pricing in currency devaluations. But it’s an unpredictable situation, so many will sell first and sort it all out later.
It may be tempting to buy this expected dip today, but risk is quite high and volatility is likely to go up. It is too soon, in my opinion, to jump back into TSP stock funds. We need to let this play out a bit longer. I am looking for an entry and think an even better one is going to present itself in the days ahead. I don’t know that for certain, but I think the odds favor more downside now that the S&P 500 looks poised to fall through its 200 dma on volume. Cumulative breadth has been warning us for weeks, but price refused to fall in sympathy. That may be about to change.
I am remaining 100% G fund for now.
OT: Train starting to leave the station?
#msg-115665145
Regression to the Trend
We are running at the second highest variance to the long-term C Fund trend extending back to 1870 at 190%.
#msg-88600053
Interfund Transfer Limits
You can make an IFT at any time, but there are some important limitations:
The first two IFTs of any calendar month may redistribute money in your account among any or all of the TSP funds, including moving your entire balance into the Government Securities Investment (G) Fund.
Subsequent IFTs in the same calendar month can only move money into the Government Securities Investment (G) Fund.
Source: https://www.tsp.gov/planparticipation/interfund/IFTs.shtml
Is S Fund Overextended?
I'm not much at evaluating fundamental stats but this one stuck out to me. Check out the Russell 2K PE numbers at the following link:
http://online.wsj.com/mdc/public/page/2_3021-peyield.html
You are welcome BleeckerStreet :)