SPX- Predicted to Crash? Wait! We Were Told Inflation Was Coming
10 year interest rates are going up crazy! (see blue line) take a look at the blue channel that has contained the 10 year note for years.
Recently the bond market has been dumping lower and lower!
Many traders are playing the commodity and stock markets long by shorting the Bond Market.
They use the money from the short sale of the bonds to buy and go long the stock market (SPX)
If we take a deeper look at the 10 year minus the 2 year we get an interesting chart.
As we can see the black line is the difference in rates (yields). Note how it draws a nice oscillation pattern by developing interesting signals.
A careful eye will spot the purple area under the pink dashed line, setting up a trigger. We call this the "button hook play" from football.
When we see the "price difference" between the 10 year and the 2 year drop down towards zero (or negative) the inversion now sets up and waits for the trigger.
When price makes a "button hook", and finally comes back above the pink trigger line (10 year - 2 year is rising) it gives us an early warning.
The SPX is due to crash soon. A Recession is due in 6-24 months. The longer term bond yields have broken to far away and are
dislocated from the short term treasuries.
This happens when investors begin to believe in the "inflation" thesis. Usually they are prompted by a few quarters of fast rising commodity prices. (Fake out)
They short sell bonds to raise lots of cash to buy the stocks and commodities. In fact, traders are now as short as they where in 2018 just before the market crashed then.
The question to ask ourselves is, if long term inflation is "rising so fast", why are short term rates next to zero? Just look at the 90 day, 6 mo, 12 mo and
2 year rates, they are extremely low!
Why aren't these short term rates moving up? ... in fact they have been dropping recently!
...wait until traders realize that deflation is the play going forward, not inflation!
The huge short interest in bonds will have to be covered and they will also want to switch and go long.
Where will they get the money?
Yep, you guessed it- selling the SPX - stock market and commodities.
The chart tells us that long bonds will snap back and yeilds will drop yet again.... and that will crash the stock market soon.
Recently the bond market has been dumping lower and lower!
Many traders are playing the commodity and stock markets long by shorting the Bond Market.
They use the money from the short sale of the bonds to buy and go long the stock market (SPX)
If we take a deeper look at the 10 year minus the 2 year we get an interesting chart.
As we can see the black line is the difference in rates (yields). Note how it draws a nice oscillation pattern by developing interesting signals.
A careful eye will spot the purple area under the pink dashed line, setting up a trigger. We call this the "button hook play" from football.
When we see the "price difference" between the 10 year and the 2 year drop down towards zero (or negative) the inversion now sets up and waits for the trigger.
When price makes a "button hook", and finally comes back above the pink trigger line (10 year - 2 year is rising) it gives us an early warning.
The SPX is due to crash soon. A Recession is due in 6-24 months. The longer term bond yields have broken to far away and are
dislocated from the short term treasuries.
This happens when investors begin to believe in the "inflation" thesis. Usually they are prompted by a few quarters of fast rising commodity prices. (Fake out)
They short sell bonds to raise lots of cash to buy the stocks and commodities. In fact, traders are now as short as they where in 2018 just before the market crashed then.
The question to ask ourselves is, if long term inflation is "rising so fast", why are short term rates next to zero? Just look at the 90 day, 6 mo, 12 mo and
2 year rates, they are extremely low!
Why aren't these short term rates moving up? ... in fact they have been dropping recently!
...wait until traders realize that deflation is the play going forward, not inflation!
The huge short interest in bonds will have to be covered and they will also want to switch and go long.
Where will they get the money?
Yep, you guessed it- selling the SPX - stock market and commodities.
The chart tells us that long bonds will snap back and yeilds will drop yet again.... and that will crash the stock market soon.