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PREV (the Matrix)
Panic selling in palladium leaves few markets in early cycle upside alignment. Download the Matrix and count the markets.
The press release that palladium was/is a "bubble" by the largest South African PGM miner that dominates platinum (not palladium) was likely not a coincidence. Palladium's DI = -40% wasn't showing extreme distribution or extended cycles across all time frames. DI's minim surge above -60% was driven by accumulation from commercial traders. The accumulation would have sent above 0% if it were not for aggressive buying from the retail investor. The retail investors' extreme net long position is supporting the panic selling after the headline. Combining this leverage setup with an 'unexpected' rally in the dollar, an outcome few other than the computer recognized after the Fed meeting, has created a vicious cycle. Retail investors control only 1.6% of open interest, so continuation of the decline will be difficult if commercial traders are buying. We won't know that until next week when the Matrix reports palladium's DI.
The US dollar continues to be the main beneficiary of international capital flows to the US. It's rallied every day after the Fed meeting despite bearish calls from numerous talking heads. Bonds have been the preferred parking spot for those dollars at least over the short-term. Buying anything but short-term bonds, however, is exceptionally risky as the crisis unfolds.
Gold is catching a bid, but the alignment lacks conviction, at least for now. Subscribers are watching the PMC (line 74-77) and correlation of gold and US Dollar Index (Line 62, column Z).
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.
Subscribers are encouraged to submit comments or questions about the Matrix/Insights.
Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.