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Interest rate yield curves flattening are ignored purely for...

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nihilism

10,867 Posts.

394

25/03/19

08:11

Post #: 37869164
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Originally posted by paddington bear: ↑

Since I returned from my holidays I have mentioned a number of times that I had calculated that the markets were entering what I have called "a window of opportunity" of approximately ten days and I anticipated that the markets would give us some clear signals regarding the outlook for coming months during this time zone. Looks like we just might have had that in Friday's session in New York. The SPX is particularly amazing as it just had to go all the way back up to 2860 to fill the gaps it left in last October's crushing. To just exceed that level by less than half a point and then turn and fall sharply is what keeps chartists so engrossed and spending so much time and energy examining the blessed charts.

Have we seen another major turning point? I suspect so but as always, I must point out that there are alternatives here and the background forces at the moment are different to anything we have ever seen. Indices such as the RUT and Transports (Trannies?) have definitely been suggesting that we have seen a major reversal, but I can see how the S&P might be able to find some support. However, it will depend to a large extent, on ow this correction plays out but I don't hold out much hope of a nice outcome.

We have had growing divergences for weeks but as I have also mentioned over a longer period, divergences can take time but ultimately the pressure becomes too great and markets crack.

Interesting that economists in the US seem to have been making the same mistake that our very own were making - ignoring the trend of interest rates until it was staring them in the face. Our rates have been crying out trouble now for months.

But what really astounds me is our banks. The XXJ index had ten, yes ten, consecutive down days before it could find the strength to at least have an up day last Friday, and then when it did, it couldn't even hold on to that gain for a day and ended only slightly ahead at the end of last week's trading. I know I have carried on about the weakness of banks for months - well actually it is getting on for years now - but this latest week's trading is just another indication of the rather negative background that this group are still fighting against. (The same could be said about the US banks. I have mentioned many times that even when Wall Street was having this recent rally, the Finance ETF was not participating.)

Gold finished Friday's session a bit firmer which should help our gold sector today. Could have done without that report from SBM when I already have a few worries on our gold index. As mentioned previously, not happy with the way XGD keeps hitting up against a rising trendline. I need it to break above this line or we might have to be really patient, something not many of us are in the mood for at the moment.

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Interest rate yield curves flattening are ignored purely for virtue of not wanting to be negative while (usually) a bull market is going on. Once the yield curve inverses then all the analysts jump on the bear train faster than an NZ prime minister jumps into action (in this case, Kudos to her!).

Not sure why I'm surprised, these people get paid for headlines, not for expertise... but it's still a fascinating pseudo-science that they try and push their opinion as a prediction despite rarely including a timeframe or any actual numbers, and still jump up and state they called it perfectly.

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