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PREV (the Matrix)
The bond markets are aligned again. Early cycle alignments are difficult to ignore. What does this say about the economy? The same economy that the taking heads/politicians say looks better than ever. Subscribers know better. The Economic Activity Composite (EAC) is poised to enter a contraction at the end of the month. Contraction is defined as ITCO and LTCO < 0. That is, unless key sub components do the unexpected by showing significant improvement over the next three weeks; don't count on that. Friday's job report, a widely followed, lagging and unreliable economic indicator, has the promoters worried over the weekend.
Japan and Russell 2000 have also entered alignment. Please study the Matrix for direction and strength of the alignment. Bottom line, the bullish economic and stock narrative to a hit on Friday. Don't react. Think. The Matrix tells us the economy has been deteriorating for months. Stocks have fallen, but the VIX and sentiment model description of the trend has not changed (line 62, column D). Don't let fear define the trend for you.
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.