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PREV (the Matrix)
Most investors scan the headlines for ideas and interpretations of why things are happening, but smart investors scan the markets. Trend alignment, particularly the primary trend, does not change day to day, even week to week. Alignment tells us to focus on gold, gold shares, palladium, and the grain complex. By the time talking heads are telling us why something is happening, it's been discounted in markets for months. Markets are forward looking.
Headlines constantly remind investors that stocks and bonds are reacting to hope about the US China trade talks. Resolution of these talks are already price in the market! The market will only respond if something other than face saving, extending the deadline compromise is presented. Smart money knows the market is looking past the trade negotiations, likely Brexit, the coming elections in Europe, the strength of the global economy this summer.
Whether or not US stocks test the December lows depends largely on the strength of foreign capital flows to the US. The stronger the flows, the shallower the correction if one comes at all. Market breadth, charts added to the Matrix in line 61 and 62, suggests the rebound from the December low is stronger than advertised, or believed by investors. A pessimistic majority and hidden strength in the NYSE AD line, and McClellan Oscillator define a rally climbing the wall of worry.
BuST & BrST > 0, observations made in the daily, weekly, or monthly time frames, warn investors where upside or downside alignments are pushing against the cycle of time. The computer defines these alignments as Early, Mid, or Late. Late cycle alignments are vulnerable to reversal. A daily BuST or BrST > 2, for example, suggests a growing probability of consolidation ahead even in Early and Mid cycle alignments.
Using the Matrix
The value of the Matrix is far more than a study of price. Trends are a function of price, volume (force), volatility, and TIME. The order of their importance is as follows: (1) TIME, (2) volatility, (3) volume & price alignment. Volume and price alignment, a setup that triggers action, favors Grade A & B, early cycle markets under high compression (↓COM). ↓COM suggests extremely low volatility, a quiet trend ready to explode into high compression (↑EXP). Weekly and monthly breakout signals are not finalized until the end of the week and month, respectively. Signals generated before that could be temporary. Keep this in mind when reading alignment.
Suggested Reading: The Cycle of Accumulation and Distribution (CAD), Leverage Oscillator (LTLO), Diffusion Index (DI), Volatility Bandwidth (BW), Compression (COM), Expansion (EXP), Alignment, Upside Alignment, Downside Alignment, Sentiment Model, Intermarket Trends, VIX Model, Economic Activity Composite, Long Term Cycles.
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Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.