Seems like I just talked about bond.. oh, yeah, I did last week. Well, the story seems to be the same.. bonds weak, the 10 year weaker.. The 10x30 spread continues to flatten, now at 113, down from 160 just a couple of weeks ago. The bond vigilantes are taking away the Bank's cookie jar. The 10 year is trading at 3.38% and the long bond at 4.51%.
Our Proprietary Momentum Change Indicators generated a Buy signal for the SPX on 12/1, and that signal is still in effect. In addition, our Momentum Change indicator for the 10 year note has been in Sell mode since 11/9, as has our Momentum Change indicator for the Dollar been in a Sell mode since 12/3 79.50. Our Momentum Change indicator for the Euro has an inverse signal to the Dollar, generating a Buy signal on 12/3 at 132.51.
While we a pleased with the SPX Buy signal generated on 12/1, we remain concerned about large, and in some cases growing negative divergences in some measures of internal market strength. For instance, the A/D 10 EMA continues a major divergence first noted in July, and the A/D daily cumulative has been showing a divergence for several days. The RSI for the SPX is in negative divergence, while Stocs, both fast and full, are flattening at the top. After some confusion yesterday, with the SPX and the Dow advancing, the Q's, the COMP, the DJT and the RUT were all down. And one of my favorites, the Parker Sentiment Indicator continues to show growing negative divergence. Not to even mention the historic Bullish Put/Call ratio.
But we will stay with the long side until the Momentum Changes.
Today, it seems all markets are "Risk Trade On-Full Steam Ahead". No need for no stink'n safe haven in the bonds or the dollar!
Best to your trading!
Bill
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