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New alignments: Junk bonds, copper, and silver. Junk bonds and copper are primary trend breakouts. Copper, however, is a weaker setup.
US stocks posted strong gains on a report of stronger than expect growth out of China. Nice explanation, but US stocks have been in bull phase or upside agreement of the sentiment and VIX model (risk) since 2/9. Headlines won't publish that largely because it doesn't explain yesterday's action, but alignment is alignment. If stocks decline on Tuesday, they'll find some excuse to explain the weakness, but the reality is that most day to day trading action is noise within broader trends and cycles. Subscribers use the Matrix to filter this noise, otherwise we send most of the time chasing our tails looking for daily explanations.
Is unexpected economic strength out of China to be believed? Don't know or care. The Economic Activity Composite (EAC) is out guide for future economic activity. The current message, a trend constantly updated, suggests that the economic bounce narrative is correct. EAC's ITCO and LTCO, intermediate and long term measures of economic activity, were -6% and -7% in March. Early April figures, tentative numbers at best, are 7% and 1%. An economic bounce if maintained through the end of April. My point, is let the headlines talk their nonsense and listen to the message of the market. The EAC, a time series heavily dependent on real time data, anticipates the future rather than records the past. Follow it. The invisible hand can't be surprised by this as the 10-year and Treasury Bond's DIs were nearly -100% last week. Does this mean the economic bounce is permanent? Unlikely. A cyclical bottom in the economy is not due until 2020.
Economic Activity Composite EAC (Matrix Line)
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.