jangseohee

Divergence to build potential triple top

HYG/TLT  
HYG/TLT  
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I use ITOT as a representation of DJI, DJT, SPX , RUT, COMP added together.
HYG/TLT ratio as longer term measure of fund flow and JNK as shorter term measure of fund flow

1st: using a line chart for ITOT, i can see that the uptrend angle has decreased from 30 to 17 degree.Meaning the price upwards has moving at a much slower rate.

Right before Dec 2013, HYG/TLT ratio increase in tandem with ITOT, which tells us that risk appetite in high yield bond is increase and thereby the same applies to stock. Jan 2014 onwards, i see a divergence between stock price to HYG/TLT ratio. The diminishing HYG/TLT ratio simply means that money is flowing more into TLT (safe haven). Currently HYG/TLT ratio is contained in downtrend channel . To add matter worst, JNK started to give negative divergence relative to ITOT starting June 2014 as well. And it looks to me that a double divergence is developing while US indices are poise to make more new high!

The risk of junk/ high yield bond like HYG and JNK has dwindle simultaneously in synergy while stock price keeps going higher.which scares me alot .

Lastly, i did a wild projection of how ITOT will unfold in near future.And we could possibly having a triple top
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