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For the near to medium term, serious clouds are gathering over US bonds &
stock indexes.... further complicated because the two markets can be so
closely linked.
Although I trade in intra-day timeframes, I like to look at the "outlook
scenarios" for the next few weeks or months so that I'm less surprised when
something significant shakes the market either way.
1) BONDS: a) virtually all my very short term early warning signals are
negative. b) my bond system concensus went from mildly bullish to early
bearish the last week of April c) we're sitting on important post-October
low d) It doesn't look like the commercials will help insofar as they appear
to be going net short as of the last COT
e) Friday is probably the key..... watch this employment report real close,
see below.
2) STOCK INDEXES: a) IMO, rallied from early March largely on the global
bond rally and, conversely are now seriously threatened by the scenario above
b) we now see virtually ALL stock indexes at what look like Elliott wave 5
tops in important resistance zones (not the least of which are GET mob levels
above ALL major indexes) c) OTC & RUT are sitting on up-trending support,
very precarious... S&P is near it's uptrending support also. the DJT, DJU,
and DJIA are still somewhat above support. d) While my very early warning
signals in stocks are mildly positive, it would only take one broad down day
to wash alot of them out and e) my system consensus has never been strong on
this march to present upleg..... never getting much above 60%.
SO, my strategy now: Focus On Friday...... 1) The Employment report is
HUGELY bullish ( Unemp rate increases a couple decimal points, payrolls go
down, etc.) THEN, the bond bottom is probably in for awhile, stocks
continue to group rotate but build some kind of base..... 2) Employment
report is at all bearish: bonds break support decisively, all markets
around the world worry, and we head into a decline of at least a few
weeks.... The key factor then: what happens around recent low in Japan Long
Bond.... 3) Report is flat.... then technicals govern, and they don't look
positive short term.
overall, a very interesting scenario for next few days.
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