QuantitativeExhaustion

Risk On or Risk Off, Bonds or Stocks ?

AMEX:SPY   SPDR S&P 500 ETF TRUST
In the beginning of 2014 we saw a big shift with investing. Investors bought both US stocks and US bonds. This trend lasted up until September of 2014, about same time oil started to break down and stocks became very volatile. Also during September we saw a big shift to US bonds. As the market gyrated with oil volatility - OVX - US bonds grew even stronger.

However, today I saw what looks like a turnaround in this trend since September. As oil went up, stocks went up and bonds went down by a significant amount. This is important event, because it signifies were in an early stage of another risk on move, meaning investors will once again take more risk in the equity markets rather than bonds. So I will be looking for a top in TLT . Stocks may still get a bit more gyration with oil , but we should be looking to buy dips.

Note: You can also read up on my related Stage 4 to Stage 5 of Intermarket Analysis, which previews a reasoning for when to take bets in Financials. In this case your best bets might be with European Banks.

Comments



Biggest winner with US bonds going lower would be Deutsche Bank.
+6 Reply
QuantitativeExhaustion QuantitativeExhaustion


Here is a look at RSI 14 and RSI 50 Divergences
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No negotiations on Greece at EU summit, officials to meet Friday

BRUSSELS (Reuters) - European Union leaders did not enter into any negotiations on Greece's economic problems on Thursday, leaving the talks to officials who are to meet on Friday, the chairman of the EU summit Donald Tusk said.

"The leaders did not enter into a negotiation on Greece," Tusk told a news conference after Thursday's Brussels summit.

Greece, where the anti-austerity government of Alexis Tsipras took power in January, needs money to keep it afloat while it negotiates with the euro zone on what should replace a 240-billion euro (178 billion pounds) bailout scheme that expires in two weeks.

Euro zone countries want Athens to ask for a technical extension of the current programme to buy itself time until something else is agreed. Tsipras rejects that, arguing he won elections on promises of ending the bailout.

An emergency meeting of euro zone finance ministers on Wednesday failed to produce a statement or even an agreement for euro zone and Greek negotiators to continue talks before a last-chance meeting of euro zone ministers on Feb. 16.

But the president of the Eurogroup of euro zone finance ministers, Jeroen Dijsselbloem, agreed with Tsipras on Thursday to continue talks between Greek and euro zone officials to find common ground.

"I am optimistic that we will have an outcome on the technical process," Dijsselbloem told reporters.

But he added: "I am very cautious on the political side. It is going to be very difficult. It is going to take time. Don't get your hopes up yet."

After Feb. 16, EU officials fear that even if Greece were to ask for an extension of the current programme, there would not be enough time for some euro zone parliaments to approve it.

Once the bailout expires on Feb. 28, Athens will lose access to euro zone or market financing and its banks will lose access to European Central Bank refinancing or the 11 billion euro EU safety cushion for their possible emergency recapitalisation.

Greece would also lose eligibility to negotiate more time to repay the loans it got from the euro zone.
+4 Reply
if Junk bond is going up, so as SPX?
+4 Reply
Not always. Junk Bonds are something to look at and compare to equities.
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jangseohee QuantitativeExhaustion
it was until mid 2013
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TradeEmpowered jangseohee
So HYG broke out. Do you believe a rally is for real or is this a common head fake?
+1 Reply
jangseohee TradeEmpowered
JNK is very close too HYG, but
there is a gap (blue) up there, it might wants to fill that gap before coming down (it sound ridiculous)
+2 Reply
TradeEmpowered jangseohee
Question for jangshoee. So HYG broke out. Do you believe a rally is for real or is this a common head fake?
+1 Reply
jangseohee TradeEmpowered
TradeEmpowered,
1st. RSI is forming a rising wedge as well as the price.
2nd. Price is engaged in original red channel, somehow fear kicked in and accelerated blue channel forms.
3rd. even if price breaks above the rising wedge for real, price just resume action in original red channel.
4th. having said that, the potential resistance blue zone will be between red channel top and the horizontal line if price breaks out
5th. else the blue channel will take charge

Hence, IMHO the breakout is real but not for long

Please do your own analysis in case you want to trade this :-)
+2 Reply