After a strong rally in early 2019, commodities seem to have taken a breather in recent sessions. Since mid-January 2019, due to increased global macro headwinds, as well as slowing economic activity in Europe and China, commodities (DBC as a proxy) have been treading water against key safe haven assets such as the US Dollar (Part 1) and US treasuries...
Commodities vs US Dollar:
As can be seen in in the chart above, when commodities are measured against the US Dollar, the price ratio (DBC/UUP) failed to move higher in recent sessions, and is struggling to re-test its 20-Day EMA (Green) and 50-Day EMA (Blue).
See Commodities at a Crossroads? (Part 2) for our commentary
From a quick look at the US Bonds (LQD as a proxy) and US Equities (SPY as proxy) price ratio, it seems like money is moving slowing moving back into bonds at the moment. This is most likely due to the poor global economic data that has come out in recent weeks.
Time will tell as to whether or not this trend continues. But for now, bonds seem to be the asset of...
After peaking in late December 2018, the price ratio between 7-10 year US Treasuries (IEF as proxy)(numerator) and US Stocks (SPY as Proxy)(denominator) has fallen since then. This is backed up by the fact that the US Treasuries/US Stock ratio fell below its 10 day EMA (Green) and failed to move higher. We believe that this indicates that “Risk-On” sentiment is...
As the markets move into 2019, it appears that gold (GLD) is beginning to get its luster back.
Gold prices have risen since bottom in early October, as market volatility and macro issues continues to plague the financial markets.
With strong technical patterns also confirming investors' bullish sentiment on the commodity, our price target for GLD is at $126.11.
After the formation of a solid "Inverse Head and Shoulders", the price ratio
price ratio between US Treasuries (IEF as proxy)(numerator) and US Stocks (SPY as Proxy)(denominator) took off past the neckline of 0.39 in early December. A Golden Cross between the 50/200 Day EMA further supports the trend.
This indicates that money is flowing into US treasuries, as a...
Looks like weakness is beginning to show up in junk bonds, which in turn, does not bode well for stocks or other risky assets.
It looks like the recent selloff is not just due to market overreaction, but more due to a shift in market sentiment to the downside.
If this persists, look for more downside in Junk and other risky assets.