Thursday, May 9, 2019

Matrix Updated #Stocks #Bonds #Commodities #Bitcoin

The Matrix
The PREV (the Matrix), an array that displays alignment of price & volume (trends) within the cycle of TIME, intermarket money flows, and the flow of sentiment, helps subscribers recognize buying and selling opportunities for 44 markets. Markets include #stocks, #bonds, #forex, #Bitcoin & #Commodities.

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Subscription service has been restarted. Free access to the Evaluation Matrix has not changed. The Evaluation Matrix will be updated periodically.


PREV (the Matrix)


Subscriber Comments

New alignments: Corn

US stocks continue to respond to the US China trade negotiations or tweets, yet the Matrix clearly tell us more is going on behind the scenes. Behind the scenes is far more important than the headlines, so let's look at a few of them. First, the dislocation of the S&P 500/VIX and short term VIX/mid term VIX told us stocks were vulnerable ahead of Monday's decline (Line 61 and 62). Correlations have returned to normal, so the dislocations have been removed. We need to watch for dislocations on the downside now. Spikes likely won't be as large as the warning ahead of the decline, but disagreement between price and risk often hint the majority is wrong. Second, if dislocations don't materialize (they sometimes don't during correction in a broader uptrend), the flow of energy always does. Stocks and the VIX's diffusion index (DI) will show us if this decline is being accumulated or distributed. The greater the pessimism, the more likely the decline will be accumulated by the invisible hand. I will be watching the Nasdaq 100 and VIX. A rally and decline in DI would be bullish. Moves above and below 60% and -60% would be extremely bullish. Finally, the flow of money, i.e. the tape, must be framed within the context of longer-term cycles. The computer reports these in the long-term cycle sector of the Matrix (Line 108-126); please download the Matrix for a full view. Long term cycle readings change on a daily basis, but the message is usually the same. For example, the S&P 500 has entered a probable long term decline its C4 > 1.96. This reading tell us that the long-term cycle is extended. While some might think, time to sell, not so fast. Long term readings reaches a historical MAX of 3.31 in 1901.04. Personally, I prefer using the dividend yield cycles as they incorporate both price (S&P 500) and yields (fundamentals). As you can see, dividend yields long term cycle C4, a cycle that moves in opposite direction to the S&P 500, is nowhere near -1.96. In other words, while price is high, its supported by superior "fundamentals". This is the only way I use fundamentals.

Long Term Cycles (Truncated Table)



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.