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ISM decline in recent months indicate more SPX weakness is ahead

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Oil and DXY got in line in last several weeks. Inflation expectations are still high despite some decline lately. Slow Stochastic is oversold, so it may bounce a little here but it should keep declining unless oil and USD move significantly.

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Copper / Gold ratio pointing to lower 10 year Treasury yields around 2.40%. US yields seem to high on many measures but improving CESI and too much safety bid lately can push yields even higher before the real downturn begins.

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DG's relative performance vs SPY is highly correlated with TLT on a weekly basis. Recent breakdown in correlation gives a good trading opportunity Either DG is mispriced vs SPY or TLT is very cheap

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Business cycle points to lower long term government bond yields. US 10 year yields seem to be the most at risk. LONG LT BONDS & Bond proxies

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Slowing business cycle also points to further weakness in EM equities until end of 2019 or steel prices turn higher. SPX may be more resilient but upside should be limited. IF EM equities will be under pressure, it is likely that DXY will be strong in the coming months. SHORT EEM bounces. Be cautious on SPX

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Business cycle has turned down again as depicted by steel prices and long term treasury yields. Last time, it was Chinese money printing that kick started the cycle again. This time Chinese are still slow to inject meaningful liquidity to the system. Once they get going, it takes 9-12 months for the economy to feel the real impetus. Hence, business cycle is likely...

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German Real Estate has been highly correlated with XLU and bonds while benefiting from flow of liquidity into equities. In previous slowdowns it has performed quite well. At least it has behaved quite predictably where buying the dips around KC and RSI o/s levels proved profitable.

quixilver Updated 

Study of Feb 2016 correction to build strategy for future corrections

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Study of hourly chart of SPX for building a strategy for future corrections

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SPX yoy performance follows ISM Source: Raoul Pal youtu.be

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Inflation expectations too high vs DXY likely due to oil strength Should correct with lower oil, lower DXY, and lower InfExp RSI divergence in place

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When the yield spread touches BB, it generates trading signals. Copper leads Chinese yields Chinese yields lead US yields Stopped working in 2018. Keep track in case it starts working again

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US 10 year treasury rates vs SPX performance

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SPX seemed to track 2013-2014 period in 2016 and early 2017... Let's see if it reconnects

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Inflation expectations are negatively correlated with the value of US Dollar. This chart gives you two potential trade signals 1 - If there is big divergence btw DXY and Inflation expectations, you can bet on a reversion 2 - When RSI is overbought or oversold, you can trade bonds and USD for a correction Current signal is a moderate short USD or long TLT

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China 10y yields lead US yields When spread is outside of BB, US yields should move in the coming weeks. Also, China 10Y yields track Copper prices Source: www.mcoscillator.com

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USDJPY disconnected from yields... Short USDJPY