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PREV (the Matrix)
New alignments: None
Not much has changed in the Matrix this morning. I am noticing, however, that the Economic Activity Composite (EAC) continues to deteriorate (see EAC). It really looks as if the recent uptick within a broader downtrend is over, and yes, I know the vast majority of investors (& public) have no idea the economy is deteriorating, but that's not going to stop it. Rhetoric about the economy will only intensify as the 2020 election approaches. The embrace of social media by politics means spin geared towards supporting the perpetual campaign is already in full gear. Politics is game to many. A game to be won to the benefit of self, while mostly ignoring the consequences to the broader public. This means, as always, the public will not be ready and confidence is extremely vulnerable in 2019.
Confidence, the glue that hold all systems together, is extremely important for financial markets. If confidence fails, unexpected outcomes are likely. One outcome that's likely is loss of confidence in the public sector. That means a growing inability to borrow to maintain the institutions that the majority believe could never fail.
Economic Activity Composite
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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