And Let’s Look at Just a Few More Things (Yields, Dollar, Bitcoin, $VIX, and $JNK)

Just a few more observations I would like to make this weekend.

The 10-year yield has a very well-defined head and shoulders pattern up here at the high. This is a very good sign for the bulls:

10YRYLD

This doesn’t have to mean anything for Monday, but it’s going to help soon I think.

The dollar is powerfully overthrowing its bearish wedge:

DXY

It still has the right proportions for an “overthrow,” but if it gets much larger, it’s not good. There was also divergence on the daily RSI that formed a trend line, and that trend line broke:

DXY

There is still divergence, and so it’s still ok (for equity bulls), but breaking that trend line just goes to show how powerful the move has been. Here we are, above the June lows, and this squeeze is far more powerful than the move even in the depths of the COVID crash. There’s just no way the Fed can let this persist. It’s not possible for them to let the world financial markets completely implode. World governments will cease to function around the world and that’s not what they’re trying to do here. By no stretch. They’re going to pivot, or pause or something. They have to. They may just talk, and that’ll be enough.

Bitcoin is odd. It’s not taken out its recent lows as the S&P has, but instead, it’s just made a little coil here. I think it is a triangle (for blue “b”). And its placement makes me think the Orange 2 (which I had thought was complete) has one more drop:

BTC

And the $VIX came up to revisit its big red wedge. I find it notable that we’re at the June low essentially while the $VIX remains fairly well under all these prior highs. This “$VIX making lower highs while the S&P makes lower lows” throughout the year is generally a bullish divergence as volatility is not confirming the move. It was sort of spiky today, so if the S&P has one more drop and this recent high holds on the $VIX holds, that will also be bullish.

VIX

And let’s look at this little feature of $JNK going into the close. I didn’t like that while the S&P tried to rally into the close, Junk bonds did the opposite:

JNK-SPX

So, I am open to a little more trouble ahead (as noted here). But not much, I think.


Note: When articles are first published, most of them are made available only to my Patreon supporters (I do try to publish some public posts on occasion). Over time (usually after a period of a few weeks or so), I make all of the work public. To gain access to my work when it is produced (or to join my Discord chatroom), please consider becoming a patron. Note that there is a 7-day free trial period. More information may be found on my About page and on my Patreon page.


Leave a Reply

Your email address will not be published. Required fields are marked *