TNX Doesn't Buy the Rally in SPX Stocks IndexStock-Markets / Stock Markets 2016 Feb 25, 2016 - 09:54 PM GMT
It appears that the rally is challenging the 50-day Moving Average at 1944.37. A new high above 1946.70 is not needed to change the Elliott Wave structure back to my original assessment, that Wave (2) peaked on February 1. I have re-oriented the chart to show this. The Broadening formation views this as an extension of point 5.
Note the trading bands are contracting, suggesting a large move ahead. The next step in this scenario is a potentially sharp decline. The Cycles Model calls for a probable decline through Friday, March 4, if I am reading the Model correctly. There may be a brief extension into Monday, March 7. The Cycles Model has kept my orientation fairly close to what the market has been delivering.
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VIX is being jammed for the moment, but no new lows. It appears ripe for a strong rally and the Pivots are in line with SPX. In this case, VIX shows strength through March 7 in the Model.
TNX is pulling back from its early lows, but isn’t buying the rally in SPX. The source of the juice in SPX appears to be the USD/JPY in a corrective spike that now appears to be waning…
Treasury yields appear to have already started their crash. A further decline beneath 16.49 or beneath the Cycle Bottom at 15.96 may confirm the crash may be underway.
The BKX was finally able to fill its gap this morning. However, it is now being detained by the short-term resistance at 60.41. Note the Trading Bands are also contracting in BKX.
SKEW tells us that those hedging the SPX in the options have virtually been chased out of the market by the short squeeze down to the early August level. This situation is ripe for a crash because market perception as indicated by SKEW is near 100, which is means the market views tail risk as normal.
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