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HIGH DEF VIDEO – MAY TAKE 15 SECONDS TO LOAD
Hope you’re enjoying your long weekend. Just some thoughts on related markets – Crude, Copper, Euro, Aussie, Gold, Bonds, etc. – and a turning point that’s setting up this week.
If you’re reading this article via email or RSS reader, then follow this link to view the Multi-Market Review video on the website. Good luck with your Emini trading.
It’s Monday and I sound really depressed – I’m not. Trading’s good and I shouldn’t care which way the market turns – just take my setups.
But in case you haven’t noticed, the Bond markets are going crazy.
The Bond and Equity market correlations broke down after 2008 – and so my old Bond Market Analysis and over-bought/over-sold levels no longer apply.
So what is the Bond market telling us?
I don’t think it’s good. There’s a huge flight to safety and consensus/realisation that we’re in a deflationary cycle. Duh – remember all that scare mongering about hyper-inflation? Yes, maybe some time in the future, but we’ll have to take our deflation first.
If you’re reading this article via email or RSS reader, then follow this link to view the Bond Market video on the website.
HIGH DEF VIDEO – MAY TAKE 15 SECONDS TO LOAD
Good luck with your Emini trading this week.
Oh, and by the way. If you’re interested, I’ve updated the Trading Backup article on the website and turned it into a 5-step plan.
I gotta tell you – I’m loving the new Mac. Having a stable operating system and some grunt has allowed me to use tick charts for my swing trading charts.
I recorded this video a few days ago about using the “Better” indicators on the Bond markets. Remember, I’m still just trading the Emini but the swing trading charts helps with the bigger picture.
If you’re reading this article via email or RSS reader, then follow this link to view the Bond Market video on the website.
HIGH DEF VIDEO – MAY TAKE 15 SECONDS TO LOAD
Here are the settings I’m using on my Swing Trading charts:
Oh, and in case you’re asking: Why the obsession with tick charts? Well, better signals and the ability to identify Professional and Amateur activity.
Good luck with your Emini trading.
Quick video this weekend on the Bond Market. Are we about to see a breakout in yields and a collapse in prices? If we do see this, personally, I don't think it's being driven by inflation expectations but more by the declining credit worthiness of the US and other developed economies.
If you're reading this article via email or RSS reader, then follow this link to view the Bond Market video on the website.
HIGH DEF VIDEO – MAY TAKE 15 SECONDS TO LOAD
And here are the monthly yield charts for the 30 and 10 year US Government bonds. They're both butting up against resistance levels. Will the next Fed meeting cause a breakout?
Hope you're enjoying your weekend and good luck with your Emini trading next week.
I have no idea why this works … but significant lows in the Bond market are followed by significant lows in the stock market 20 days later. The chart below shows the Bond market and the blue vertical line shows what was happening 20 days ago. You can read more about the Bond market and Emini trading here.
My swing trading oscillators (TRIN, Put Call Ratio and Smart Money) have now all turned up. Check out the Emini daily chart below – Better TRIN early again.
At the beginning of the month I was expecting a pullback in the Emini on the 135 minute chart. That pull back rally turned out to only be a one day event and we never got the pull back signal. This time I think we’ll get it – volume over the last week has been huge, sentiment is at an extreme low, the crude oil rally has cracked and valuations against the bond market are attractive.
Having said that, there was a lot of high volume churning going on at the end of today’s trade. We could see the Emini fall back at the beginning of tomorrow’s trade and I’m looking for support around the 1,230 to 1,235 level.
Good luck with your Emini trading.
More Professional accumulation today around the 1,335 level – and we finally got the "End of Trend" signal on the 135 minute time frame (primary swing trading time frame).
The "End of Trend" signal sometimes marks the absolute low (or high) almost perfectly – particularly when it coincides with a cyclical turn in the higher time frame (actually 2 time frames higher). However, in this case the weekly Hilbert Sine Wave is some way off making a cyclical low and so we’re probably going to enter a period of cyclical or range trading – as opposed to starting a strong trend move up.
Read the original article about "End of Trend" setups and multiple time frames here.
Final chart shows the Bond Oscillator which measures over- and under-valuation of the equity markets compared to Bonds. The Bond market appears to have found support but is not yet in an uptrend. The chart below shows the fundamentals might be starting to line up for a bullish medium term scenario.
You can read a longer article about Emini trading and the Bond market here.
Good luck with your Emini trading.
Things seem to be going so well:
So what’s the problem? Well … Bonds fell hard today.
Bonds have been in a consolidation zone for 10 days (white bars) but dropped through a rising trend line today. If Bonds are on the way down, then the stock market is likely to follow – after a suitable delay.
Turning points in the bond market can forewarn of turning points in the stock market 20 days in advance. If that’s the case we could see a turning point in 2 trading days time or possibly in 9 trading days. However, these turning points in the Bond market are not well defined – so I might be reaching a little here.
In any case, I’ll be watching the Bond market to see if this decline continues.
Good luck with your Emini trading.
In case you haven’t heard, the Emini is down 60 points in limited trade on Monday. The close was 1,265.50 which suggests we might get an opening gap down on Tuesday of over 50 points. The last time this happened was after 9/11, shown below. Remember this will be shaking out volume and playing into the hands of the smart money.
John K. sent me an email asking about my bond market valuation comment here. With Bond markets rallying the Emini valuation against Bonds is very attractive now. The updated Bond market valuation chart is shown below. The over-valued areas are painted white and under-valued areas painted red.
You can read more about the Bond Oscillator and Bond market analysis here.
Good luck with your Emini trading.
It’s happened again! The Bond market nails a significant Emini turning point.
I’ve posted previous articles about the correlation between the Bond market and the Emini here. Back testing shows significant turning points in the Bond market are often followed by turning points in the Emini 20 trading days later.
The chart above shows the Bond market with a blue vertical line showing what Bonds were doing 20 days ago. And right on cue the Emini took a tumble today, just like the Bond market did 4 weeks ago. The run up that we’ve had in the Emini over the last month also mirrors the run up that the Bond market saw leading to the turning point in early September.
If you’re interested in the TradeStation EasyLanguage code for the vertical line and other Bond market indicators you can download them from this article about Bond market analysis and indicators.
Bond market continues to advance and the Emini valuation becomes over sold. The Emini continued its decline, closing down 38.75 points at 1,443.00 on Friday. Meanwhile, the Bond market continued to rally in expectation of a rate cut.
The chart above shows the Bond market bottomed in early June and broke into an uptrend in mid July. Bonds have now closed above 110, a previous support level. Trend lines on the Bond chart are drawn automatically with TradeStation code and colored red for uptrend, green for downtrend and white for consolidation.
The chart above shows the Emini with valuation indicator added. The valuation level has now dropped to -11.3 and is at the lowest level since February 2003. Valuation levels below -6 are oversold and colored red on the Emini price bars. Overbought levels above +6 are colored white. You can read more about the Bond market and Emini valuation indicators here.
The Emini has now dropped into oversold territory and looks attractive by historic bond market valuation levels. In addition, the latest Commitment of Traders data shows professionals continue to be long. So the fundamentals look good for an Emini rally. In addition, Emini volume has been at record levels over the last 2 weeks – another bullish signal. However, cyclical indicators have yet to complete on the downside and turn. So my best guess is that we have a few more days to go before we can start taking long trades.
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