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PREV (the Matrix)
New alignments: None.
Subscribers have been watching the sentiment and VIX models have supported (and continue to support) the US stock rally since early February. Now some cracks in the form of rising term structure VIX correlation (Line 62, column P) and New High Low Index (Line 63, Column AD)* are beginning to show. These cracks are small and could easily seal themselves as the market breathes through shorter-term cycles, but they must be watched.
* The New High Low Index has generated upside crossover. While upside crossovers are generally bullish, those generated when the Bollinger Bands are wide rather than narrow (compressed) can hint that the market has more consolidation ahead. Compressed BB, an outcome that could setup in the coming months, is more durable.
New High Low Index
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.