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US02Y

SPX | Spaaace!!!Spaaaaaaaaaaace! Let's make a quick party, also bring a cake to celebrate! Make it quick, because it's late and I am tired and I should be sleeping by now. We have reached the top of the world. Well, equities have. It is time for them to lose value big time. Their successor is here, bonds. I have talked about it extensively in my last idea. This is an urgent idea I wanted to post. It seems that day-by-day we might be witnessing the peak in equity price. And this idea is dedicated to the person who gave me the crazy idea to analyze something like that. The idea is simple. We all know the immense yield inversion, it is definitely ugly... What if we found a way to analyze SPX based on the yield inversion itself? That is the idea of @CryptoTaoist and I am very thankful for it. All credit and all the likes this idea gets, are dedicated to this person! Yield curve is a way to calculate money creation (normal times) and money destruction (inverted times). Green is good for money, red is bad. No wonder dollars are green but flammable! We also know that yield inversion is strictly bound to recessions. I will naively try to add these two together, equities and inversions to get an idea of when the recession is actually beginning. Me and others have posted about how the US isn't in a recession yet. This can be seen if we multiply SPX by yields. In a sense, this year we had no recession for the US economy. Please bring a real cake, not this lie... The next part is analyzing whether SPX is performing good or bad considering the current rate of money creation / destruction. In a sense, dividing SPX by the yield curve. If you calculate the yield curve as US10Y-US02Y you will have trouble analyzing it compared with SPX. Captivity of Negativity. Zero values for the denominator make a mess of the chart. You could instead opt for a bodge, to fix the denominator by adding 1. While this works, it is not harmonic enough for my liking. I will create a new yield curve, but instead of standard yields I will calculate it using modified-yields. More about the modified-yields in this idea below. The new yield curve (in blue) is following the standard yield curve (in orange). So it can be considered a satisfactory replacement. Do note that on the numerator we have modified(US10Y). On the denominator we have modified(US02Y+1). I add this +1 so as to further normalize the chart. In normal times US10Y and US02Y have a difference of ~1%. To conclude, we divide SPX with the modified yield curve and we see the following: A surprisingly smooth chart shows us what we expected, that the US isn't in a recession yet. It is also incredibly straight, from 2010-2022 and today. This means that yield curve and SPX correlate very well, if we modify them appropriately. In a sense, dividing SPX by the yield curve calculates the following: How much SPX increases as money gets destroyed? If SPX can swim against the tide (money destruction) this means that it is very strong. A strong economy can hang on even when money is destroyed. US hanging on even with that immense of money destruction, means that it was (and perhaps still is) a very strong economy, which can withstand a heavy beating. Note: DGS2 is a good replacement for US02Y if you want to analyze old historical data. Feel free to notify me of indicators that calculate even older yields of the 2 year bond. But where is the ceiling in this chart? While the 2.0 Retracement proves a significant resistance point, it is inconclusive of whether it is the terminal ceiling. One answer may lie in the following chart: (I knew the cake is a lie!!!) We have divided by M2SL and multiplied by 10^12 to bring numbers to measurable scale. A normalized chart appears, and we also observe a curious ceiling appearing. Price obsessively tries to penetrate this ceiling, just like DJI/M2SL did in 2018-2020 Are we witnessing the very last weeks of the equity bubble? Tread lightly, for this is hallowed ground. -Father Grigori Captivity of Negativity is a reference to Bagwell of the Prison Break TV Series.
SP:SPX
by akikostas
11
DOW(N)? | A Dollar Milkshake ScenarioI feel bad when I am filling up your feed with my non-stop posting. There are too many charts that I want to talk about. I could post them as "updates" to my earlier ideas. But this would be confusing for me and for the reader. Therefore, here is another short chart analysis. The last few months were peculiar. DJI began diverging away from the other main indices, SPX, NDQ. A significantly strong movement of DJI the last few months brings hope to the Equity Bulls. A fast and high-reaching Bull Run. A discrepancy between indices is not necessarily hopeful. In classic Dow Theory, when different parts of the market moved differently from others, it signaled an alert that deserved attention. As a classic example, when the railroad index didn't confirm the general index growth, this could have been bad news. While the Dow Theory is replaced from more modern methods, it is fun looking back and analyzing using the most classical of methods. It certainly gives a new perspective into what we analyze today. While price discounts all, relationships matter. SPX, DJI etc don't live on their own. Their price is highly subject to the fundamentals of the economy, which are hard to calculate. The only thing we can do is take the fundamentals into equation, and make a retrospect analysis into some charts, just to get some perspective. I will now explain why I believe such a discrepancy occurred. An exotic chart follows, making some calculations on DJI. Later on you will understand what this chart means. Similarly for SPX: It appears that there is a fundamental ceiling above. And DJI just upthrusted to reach it. Fundamental ceilings like these cannot be predicted. We can see them from their effect in long-term charts. In 2022, what we lost in Equity value, we gained in Dollar strength. Therefore we calculate DXY*DJI to get some perspective of the absolute DJI price. It is sort-of the price of DJI relative to the world economy. While there are similarities to 1995 - and while anything could happen - I believe that this is a fake-out. But the future of Equities might not be like we expect them to be. The post-2020 period is a period that resembles a blow-off top. In my 1-year experience, DXY and Equities depend on the Yield Curve. We all know that, the Yield Curve has significant importance in calculating Equity performance. While short-term movement depends on the yield curve, the long-term movement depends on long-term yield rates. And this correlation between the Yield Curve and DXY makes sense. The yield curve represents the "rate money is created out of thin air". It's inverse represents the "rate money is destroyed". DXY is a measure of dollar strength. Strength of currencies depend on many factors (most of which I don't have the knowledge to analyze). One of these factors is currency scarcity coupled with interest rates. With all of that we can conclude to the following consequences of a possible dominance of the dollar. -- It is obvious that dollar dominance will lead DXY much higher. -- Money Supply is rapidly decreasing. The FED is dedicated into killing inflation. -- A correlation between DXY and the inverse of yield curve might lead to the following conclusion: A decisively high DXY needs a deep yield inversion. And perhaps we are stuck with a multi-year yield inversion. Price might get rejected upon attempting to enter the long-term formation. It will have significant trouble re-entering the money-creation-area (positive yield inversion) As for the effect in equities, things are quite complex... For the following charts, I will be replacing DXY with the yield-curve, which is the fundamental movement that affects dollar strength. Until now, Equities haven't felt the effect of the Yield Inversion. This may soon change. Price reached a significant retracement and with a sloped ceiling, bearishness is apparent. This chart is concerning for equities. It describes the absolute strength of the Equity Market. And with so significant divergences in such a big scale, it comes to show the sheer scale of the damage that might be coming in equities. And it will be real damage, damage that we haven't already felt. All of these are calculations are in relative performance. It is hard to calculate the effect in equities in absolute terms. One thing is for sure: A deepening yield inversion will keep the real equity prices higher for longer. Therefore we cannot calculate anything while we are in this upside down period. And who knows... The recession everybody expects may never come. If the yield curve is negative for years, the dollar will be making higher highs in strength. And a strong dollar isn't necessarily bad for equities. It is in the hands of corporations to keep the game going, and investors happy. In the years to come, the equity market may not be able to make new all-time highs. But this is not a lose-lose scenario for equities. Companies instead of rewarding investors with higher index prices, they can reward them with higher dividends. After all, an investment in dollar-denominated markets is like investing in dollar itself. And if you believe in the Dollar Milkshake, then everything measured in dollar is most definitely for you! The recession everyone is convinced that is coming, may never come. Capitalism has worked tremendously well for the US. QE and the Stock Market mania fed the .com bubble. Who knows, maybe QT and the Dollar mania may feed another bubble. Capitalism and money work in mysterious ways... Bubbles and Recessions come when nobody expects them to come. With so much money printed, we either created a recipe for disaster, or a recipe for the biggest bubble humanity has ever seen. Who knows what the effect might be if that money supply is put to work. And with such a significant shift in Bonds (from long-term bullish to long-term bearish), the money invested in them will eventually leave the Bond market and seek other adventures. No matter what happens, the future is scary and exciting! Tread lightly, for this is hallowed ground. -Father Grigori
TVC:DJI
by akikostas
4
us10y 4-14-23gm, called the top on the us10y last year as well. (view post at the bottom of this thread). swinging by to actually adjust my public bias, after a few recent discoveries. --- jerome powell explicitly mentioned in a few of the recent talks that the fed is going to raise the interest rates above 5%, and keep them there for some time. what this tells me, is they're expecting inflation to tick back up - or they're taking the extra precautions to ensure that this indeed doesn't take place. --- what i am implying here in my count - is an extension to 5.9% (at the bare minimum). this could mark a top, unless we pull back in three waves (the same we did from the recent top). 👇
TVC:US10Y
by notoriousbids
2
US02Y about to break its 1W MA50 and start a mega stock rally?The US02Y has been trading on its 1W MA50 (blue trend-line) for the past 4 weeks, closing above it on all occasions. This is a key time for (primarily) the stock market as the last time the US02Y broke and closed below its 1W MA50 (week of December 31 2018), a massive rally on stocks (which on this chart are portrayed by the S&P500 and the black trend-line) was initiated. This was at the end of the U.S. - China trade war. The 1W RSI also shows that we are closer to that break-out than ever. Will a closing below the 1W MA50 give investors finally what they've been waiting for? ------------------------------------------------------------------------------- ** Please LIKE 👍, FOLLOW ✅, SHARE 🙌 and COMMENT ✍ if you enjoy this idea! Also share your ideas and charts in the comments section below! ** ------------------------------------------------------------------------------- 💸💸💸💸💸💸 👇 👇 👇 👇 👇 👇
TVC:US02YShort
by TradingShot
$TNX is weakening, no longer holder better vs short term Yields$TNX has held better than short term #yields but could this be changing now? - The 2yr & 1Yr are holding. - Of course, it's early in the trading day so we'll see tomorrow morning how things go. - In reference to the post last week on #yield in 2008, we need to keep an eye on TOPS in these #bond yields. It took 1 year at that time before there was a lower high. IMO will happen MUCH FASTER. Perhaps 6 months tops, no pun intended. :) #stocks #cryptotrading #rates #interestrates
TVC:TNX
by ROYAL_OAK_INC
US02Y: BOND MELTDOWN / 4.00% CROSS / MACD CONVERGENCE / RSIDESCRIPTION: In the chart above I have provided a simple MACRO ANALYSIS on current bond market meltdown where the US02Y dropped nearly 25% within FIVE TRADING SESSIONS. POINTS: 1. US02Y deviation is simple & marked at every 1% difference as bonds rise and fall within the same range percentage therefore it has a rubber band like price action relationship with it's lowest 1% points. 2. Overlapping Orange Line represents ES1! a US Market Future. 3. Dotted Green Lines represent continuous downward momentum in past Bear Markets (2002 & 2008). 4. Bubbles overlapping dotted green lines represent initial break of supporting bond percentage %. IMO: In my opinion the most concerning factor to take into consideration when it comes to current bond positioning is the STEEP RISE IN PERCENTAGE especially when the overall US market momentum is tied to BOND PERCENTAGE during both RISES & FALLS & the STEEPER THE INCLINE THE STEEPER THE DECLINE can become. MACD: Notice a complete meltdown of Bonds when MACD confirms convergence to MEDIAN & eventually breaks past median and falls into into negative territory. RSI: Notice that unlike in other recessions RSI levels have seen more consistent exposure to MEDIAN of 50. But as of lately from a MACRO perspective that is not the case as we have seen current RSI levels linger around 70 or above in EXTREMELY OVERBOUGHT TERRITORY. SCENARIO #1: In a very BEARISH scenario we come to see BONDS PERCENTAGE go through a complete free fall. SCENARIO #2: In a less BEARISH scenario we come to see BONDS PERCENTAGE go through an extended consolidation phase with PERCENTAGE LINGERING ABOVE 4%. FULL CHART LINK: www.tradingview.com TVC:US02Y
TVC:US02YShort
by DGSTBROKERACC
US02Y is on a breaking point. Great news for stocks!The U.S. Government Bonds 2 YR Yield (US02Y) is testing its 1W MA50 (blue trend-line) for the first time since May 31 2021. The 1W RSI is on the very same Lower Highs trend-line rejection that it was during the December 17 2018 1W MA50 test! Needless to say this shows that the price is on a critical point as when it broke in Dec 2018, a downtrend followed that was at the bottom of the U.S. - China trade war and sent stocks (black trend-line = S&P500) on a 1 year mega-rally (until the COVID crash). Will we have a repeat? ------------------------------------------------------------------------------- ** Please LIKE 👍, FOLLOW ✅, SHARE 🙌 and COMMENT ✍ if you enjoy this idea! Also share your ideas and charts in the comments section below! ** ------------------------------------------------------------------------------- 💸💸💸💸💸💸 👇 👇 👇 👇 👇 👇
TVC:US02Y
by TradingShot
5
$TNX Bouncing nicely as are shorter maturity YieldsWas kind of expected to get some bounce from #Bond #Yields. The last two days, especially yesterday, was RARE in yield price action. It happens but it's rare. The buys could have been investors trying to take advantage of higher rates being that they are "expecting" the Fed Reserve to lower rates. We mentioned that most yields, when we posted, were at or close to support levels. So the bounce we are getting today is not unexpected. Furthermore, the gap from two days ago attracted and it is filled today. $TNX was also oversold. Yields from here are tough to gauge but likely go a bit higher.
TVC:TNX
by ROYAL_OAK_INC
$TNX US02Y are CRATERING, Yields falling hardLast week we mentioned that #yields cratering like they did was not normal. Currently they are all at support with $TNX holding better than short term yields. The 10Yr has BOUNCED a bit off support. In a positive note it does lessens the inverted Yield curve :D We'll see how this scenario holds. What's happening today is more SPECULATION than anything else. The belief is that the #fed will stop raising rates due to the the bank closures that are happening. IMO I don't think it'll stop them but MAY slow them down a bit. The Fed Reserve HAS to pick between #economy & #stocks. While the Fed has been friendly to equities and markets in the past its main concern in the US Economy. They also care about the US #dollar.
TVC:US02Y
by ROYAL_OAK_INC
Yields are CRATERING - WHy?The Debt Market is significantly larger than the #stockmarket so it's VERY IMPORTANT what happens there. It's way too early to see data but, JUST A HUNCH, this is most likely the #FED stepping in & buying bonds trying to calm the markets. This is not normal to see #yields cratering so much. The 1Yr is off almost 3.26% The 2Yr is off 5.01 The 10Yr is off 5.33% This is causing more of an inversion to the yield curve. On other news, banks faltering isn't helping the case for stability or easing the fears of #economy being in turmoil.
TVC:TNX
by ROYAL_OAK_INC
Japanese have been selling bonds, have Yields peaked for now?One of the reasons US Treasuries, and other bonds, have been selling off is the dumping by Japanese investors. All duration #YIELDS have done well but more so the shorter term. The Inverted Yield Curve has widened over the last few months but has been significantly lately. However, today we see the 1 & 10Yr ($TNX) selling off but the 2 Yr is CRATERING! Interesting. Also interesting is that volume has been waning for investment grade and high yield bonds. Liquidity could be an issue later on if this continues.
TVC:US02Y
by ROYAL_OAK_INC
The (4) Four Charts I am watching closely todayPull these charts up on your radar. They are key. With today’s spike on the VIX, we may see key resistance and support lines break. If any one of these critical trendlines/levels are broken, much more caution is warranted on the long side. Let’s quickly run through the charts I am observing. DXY - A break to the upside of that macro uptrend (with confirmation on the daily) indicates a stronger dollar. A stronger dollar price must be calculated into current stock prices, weakening the current stock momentum. US500 - Testing that Macro Uptrend as support. A break below may indicate further downside (pending FED language following FOMC press conference). US Treasuries - Both the 10 year and the 2 year are pushing up against resistance. A break to the topside would indicate that the FED will continue its aggressive rate hikes strategy to tackle inflation. The dollar will follow with strength. The markets will depress even further. Crypto will follow. Treasuries seem to indicate that the FED will continue its aggression against inflation. We must pay attention closely to those purple lines/levels. Also to note, Bitcoin is up against its 200-week ma. I don’t see that be broken immediately without some setback prior. The Bitcoin price battle with the 200 weekly ma may be the earliest indicator we have to what might follow in the next few days/weeks. As always, be cautious. Don’t bite too hard on these last few weeks of bullish price action. Dollar-cost average yourself in. Place those stops. And best of luck to you all! Stew
TVC:DXY
by stewdamus
Keep a close eye on this breakout!Traders, Keep a close eye on this breakout on our fear index. So far, nothing significant has followed to the same level of price movement: the dollar is still under its macro-uptrend resistance, the US500 is still using its macro-uptrend for support logarithmically, and the US10yr/US2yr remains under resistance. But we want to track this closely to find out the legitimacy of this spike in fear. Confirmation can be had if one of the indicators mentioned above follows and breaks its support/resistance (see yesterday's video for more). Best, Stew
TVC:VIX
by stewdamus