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New alignments: None
As we discussed yesterday, the global economy continues to slow. Few notice it as the discussion remains focused on the past rather than the future. Policy makers; therefore, are emboldened to pursue nationalistic/protectionist goals because they believe they can be achieved without consequences. This view is true to some to some extent. As long as confidence holds, the consequences of tariffs can be marginalizes to grumblings of higher prices within a backdrop that nothing has or will change. That's because CONFIDENCE, a generally positive view that leaders, institutions, and finances of society can be maintained despite the nagging feeling that's something is seriously wrong.
In general, consumers and citizens won't rock the boat (disturb the peace) unless absolutely necessary. That usually comes when confidence is broken, but what breaks it? It's usually a shift from nationalism to outright protectionism, moves often made ahead or during wars (hot or cold). Yes, consumer will grumble about declining standard of livings, but confidence generally does not fall until the mechanism behind trade, the free movement of capital, is maintained. Free movement of capital is the grease that maintains the machine called capitalism. Remove it through implementation of protectionist policies that limit investment, trade, and spending choices and watch how fast the machine breaks down. Confidence crashes come shortly after. Policy makers, especially those from Europe, will likely panic when they no longer can fund the EU and specific countries within. Capital controls rather than change is a likely outcome.
As I have said many times, the confidence oscillator (Matrix Line 103) is likely the most important trend in the Matrix in 2019. While positive, it's extended in time (BuST ~ 3) and due for a reversal. Time drives all. The headlines and understanding generally come after the fact.
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.