Thursday, August 12, 2021

#USStocks Review #ES_F $SPY - Timing A Correction Part 2

US Stocks Review
Those that view the message of the market on a daily basis are likely confused by trading noise. While trading noise contributes to the long-term trends, it does not define them. Human behavior tries to explain trading noise as a meaningful trend. This confuses the majority which, in turn, contributes to their role as bag holders of trend transitions.

The global economy and stocks began behaving strangely in late summer of 2019. Repo rates spiked unexpectedly. Few acknowledged it. Anyone looking for a return to "normal" market by fundamentals will likely be disappointed in the coming years.

Stocks crashed in early 2020. Relative performance within the stock market suggests a reallocation of resources away from old to new economic plays. The old norm of "Made in USA" is not coming back. Manufacturing, design, and information collection will be borderless. Citizens will struggle to maintain their liberties and rights without oversight and intervention under this economic backdrop.

Rising stocks as the global and certain market groups decline is a real possibility that has been discussed for years. The stock market's distortion of reality is being attributed to the Federal Reserve. The Fed, contrary to popular opinion, is not that powerful. It cannot control the world's capital flows. The invisible hand, the true driver of market and trends, is redefining the world as the core economy passes from North American to Asia.

Comment:

Hello Eric,

I have been following you for over 8 months now and have been really impressed so far with the results the matrix has produced. At first I was skeptical, but as the track record proved itself I have become more comfortable following the predictions in price move. Notably, Bitcoin, Cocoa and coffee have been some of the latest ones.

I have been following your reviews on major US stock indices and VIX, and wanted to see if you could give some more insight on what to watch for a person looking to short the S&P500 or possibly buy VIX. As I was writing this email, I came across your review from June 10, and studied the conditions you listed. It looks like the first three conditions listed are checked off. Number 4 and 5 we are waiting on. Is there any other indication in terms of energy or DI that one would see prior to an major change in market direction? i.e would we be able to see professional selling and more retail buying? Would the invisible hand be looking to move away from US stocks before an major event and would we be able to see it in the matrix?

I really enjoy the reviews, keep up the good work.

Thank you,

Joel


Subscriber Comments

Joel raises some excellent questions. How do we use the Matrix to recognize when the primary trend for US stocks (S&P 500) is vulnerable? #USStocks Review Timing A Correction provided a brief overview. Let's talk about it in more detail while moving through the Matrix. I will be adding a few more points below.

The "Timing A Correction" post provided the following information for subscribers in June:

Things to watch if trying to time a US Stocks correction:

(1) Sentiment Oscillator LTSO falls below 0 (Line 53 Trends tab Matrix)

(2) VIX Model LTCO falls below 0. (Line 58 Trends tab Matrix)

(3) Direction (LTSO & LTCO) says Consolidation or Bear rather than Bull (Line 55 Trends tab Matrix)

(4) S&P and VIX or VIX Term Structure Correlations will spike. This is the most likely. (line 60-63 Trends tab Matrix)

(5) The US Treasury to S&P Ratio LTCO climbs above 0 (line 83 Trends tab Matrix). If the computer writes risk-off in the comment section of lines 79-84, it's time to take notice. The US Treasury to S&P 500 ratio has been below zero for 53 weeks. This creates a time score of 1.0. The computer highlights it red because a transition from risk-on to risk-off is growing in probability. 100% guarantee the public doesn't understand it.

Please watch the Review



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