the chart that could be flashing a sell signal for stocks

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the chart that could be flashing a sell signal for stocks

"the chart that could be flashing a sell signal for stocks" 

in the news the chart that could be flashing a sell signal for stocks? What this all about..... See below. 

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There is a curious divergence in the market right now recently the HYG has taken a bit of a leg lower. but how worried should investors out there be? this is an interesting trend here, that we are seeing. Here is the chart, 

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What does this mean?

well it means that up until the end of February investors were taking out more and more risk. Piling into the high yield bonds, and then suddenly they have realized, the fed might actually be going to raise rates soon, on march 15th, as well as increased concerned about the FREXIT, with the french presidential election. 

 Those two issues are the main 2 factors right now. What this means is that investors are starting to take some money off the table from some of the most riskier assets like the high yields and maybe now be ready to start looking to other areas in the up coming weeks.

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Investors may lose 40% in ‘safe’ bonds — and retirees are most vulnerable

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Investors may lose 40% in ‘safe’ bonds — and retirees are most vulnerable

Investors may lose 40% in ‘safe’ bonds — and retirees are most vulnerable

"Investors may lose 40% in ‘safe’ bonds — and retirees are most vulnerable" 

Investors may lose 40% in ‘safe’ bonds — and retirees are most vulnerable? Is this really true..... See below. 

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 The post-election rally so far has been a boon for stocks and a bust for bonds.

The yield on the 10-year Treasury TMUBMUSD10Y, +3.56%  closed at about 2.20% on Wednesday, up sharply from its all-time closing low of 1.36% in July. Since bond prices fall when yields rise, anyone owning longer-term bonds has taken a big hit. In just two days after the election, for example, global bond markets lost a collective $1 trillion.

If more of the same is ahead over the next few years, many investors will be in a world of pain, especially retirees, who could suffer 2008-style losses — this time in “safe” bonds.


President-elect Donald Trump's son-in-law Jared Kushner is poised to play a powerful position in Trump's presidency — with or without an official White House post. WSJ's Shelby Holliday reports.

“The typical investor today has never experienced a sustained rising-rate environment and they are emotionally and historically unprepared for what happens when interest rates go up 3% or 5%,” he said in a telephone interview this week.

Millions of Americans, he observed, “are engaging in a variety of risky behaviors, often without knowing what they’re doing. They’re setting themselves up to lose a lot of money over the next several years, perhaps as much as they lost in 2008 in stocks.”

“You could see 20%, 30%, 40% losses in the bond market over the next several years,” he continued, “and the people who are most exposed to it are retirees trying to live on their income. The people who are the least able to handle it financially are the ones most likely to suffer.”

Much of this is because of the financial crisis and the Great Recession, when the Federal Reserve dropped interest rates near zero and it and other central banks unleashed torrents of money to get the economy moving. The result was only a half-decent recovery.  Job growth has been OK, but wages have just begun showing signs of life. With a shaky global economy, Fed Chairwoman Janet Yellen has been reluctant to hike short-term rates.

As a result, retirees have earned zilch from really safe CDs and money market funds, so they’ve turned to the bond market, where we’ve probably seen the biggest scramble for return and yield in recorded history.

Problem is, while people think they’re being prudent by avoiding stocks, they are actually taking on more risk piling into bonds.

“People who are desperate for income are buying riskier and riskier bonds,” Edelman explained. “They’re buying long-term bonds, because 30-year bonds pay higher interest rates than three-year bonds, and they’re buying bonds of issuers that have shaky financials.”

“What these folks don’t realize is that as interest rates go up, the value of bonds goes down and as company performance weakens, their ratings go down and as ratings go down, the value of the bond goes down. Very often, it’s a double whammy.”

In general, the longer a bond’s maturity, the greater is its sensitivity to interest rates.  So, when rates fall, a 30-year Treasury bond will gain more in price than, say, a 10-year note.

The opposite happens when rates rise. So, investors who “went long” in search of higher yields would be hit hard if rates suddenly rise. The capital losses they’d suffer from a bond’s plunging value could easily outweigh the higher yields they’ll get.

Even worse, people have plunged into high-yield bonds, emerging-market debt, and other risky fixed-income products that carry credit risk along with interest-rate risk. With $1.6 trillion in U.S. high yield bonds and $25 trillion in emerging-market corporate debt, rising default rates could wreak havoc.

Once rates really start rising, “we will see more investment losses than we have ever seen, partly because many Americans own these bonds either directly or indirectly — either through their pension funds or their retirement accounts at work—and more people own bonds than own stocks…It is clearly something that is going to affect every household that owns assets in this country.”

The good news is you can do something. Selling longer-dated bonds when the market bounces back and replacing them with intermediate-term bonds (in every category you own.  Also, sell high-yield and emerging-market bonds the day before yesterday.

Maybe its wise not to load up on stocks, but don’t be afraid of them, either.  A broadly diversified portfolio is your best defense if the market hits the fan, which may happen sooner than we think.


We have our overall outlook for pending 2017 period in the coming newsletter

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How To Profit From The Brexit Crisis – 2 Opportunities For Homeowners & Investors

How To Profit From The Brexit Crisis – 2 Opportunities For Homeowners & Investors

When Britain voted to leave the European Union, markets all over the world took an immediate hit. Chaos ensued and people all over the world weren't sure what to expect next. However, after a few short days things started to calm down and lucrative opportunities started to come to the forefront. Here are just two of the many ways homeowners and investors can profit from the Brexit crisis. #1 – Refinance Your Mortgage Immediately after the vote came down, the yield on the benchmark 10-year Treasury dropped to 1.44%. That's the lowest it has been in four years. This of course is good news for homeowners all over the world. With lower borrowing costs, now is the perfect time to refinance your mortgage. According to Zillow.com, refinancing right now has the potential to save you up to $600 a month on a $300,000 30 year mortgage that was taken out in 2010. Please note refinancing is not for everyone. You should only refinance your home if you can lower your interest rate by 0.75-percentage point, and if you plan on staying in the home for at least 5 more years. Otherwise it won't be worth it as the fees will far outweigh the benefits. Keep in mind there are also costs associated with a no cash refinance. For instance, your mortgage may be reset to 30 years. #2 – Reorganize Your Portfolio Another way you can profit from the Brexit crisis is by reorganizing your portfolio. This is especially true for long term investors. The fear created by Britain leaving the European Union caused stocks to fall more than 5% in just 48 hours. As a result scared investors started selling off their stocks as quickly as possible. That opened the door for savvy investors to snatch up a ton of suddenly cheap stocks. Big financial institutions such as JPMorgan Chase and Wells Fargo were impacted the most by the sell off. Both however are well diversified banks and will have no problem bouncing back. As billionaire investor Warren Buffet once said, “ Be fearful when others are greedy and greedy when others are fearful.” Right now is the time to be greedy. The Brexit crisis has opened up a value buying opportunity most are too afraid to act on. Right now, given the right set of circumstances, you can greatly enhance your returns by making a few minor adjustments to your portfolio.

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Taper Talks

Taper Talks

Benny Boy - Hey Presto!

Looking at data here over the weekend, and I am starting to believe all this talk of tapering is just hyped up gibberish. They are due to give some sort of announcement on the 17th & 18th Of September.

Yes! Ok, I do believe that some day, they are going to have to stop printing money out of thin and throwing that in the market. However all these talks about tapering really is just that....all talk and NO ACTION! fancy that! :P :P

So you can put me in the camp where I believe no tapering is coming in SEPTEMBER and the reason is that there are too many concerns out there at the moment. And I am of the belief it will be a more drawn out event over many months, possibly even longer as there are too many economic concerns out there especially at the moment.

Right now with the market dropping it is self evident to me that the MARKET is PRICING or FACTORING in Tapering or wants to relieve some pressure. This is another reason why tapering will be a very lengthy long drawn out conclusion.

You have to remember we have seen quite a move in bonds lately which are going down, and futures markets are going higher.

Bonds Chart

A lot of the smart traders out there are thinking about the bigger picture and the about the bigger issues that are about to be tackled. The economy right now is far too volatile for the fed to say its safe to start TAPERING I believe.

Just my 0.02 cents.

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Did you Heed our warning

Did you Heed our warning?

A few weeks back we were warning our subscribers that there was sell volume coming into the market. Our VIP MEMBERS HERE got plenty of warning.

The start of April we did see a short covering rally and the bulls got tricked back into the market, only to find, that days later the market really sold off hard and we are currently back down at the 1540 level.

We posted our update a few weeks ago and warning about how strong bonds was looking and the move up in the S&P could be a phony one. It seems that we were correct. For Proof You can see what we said a few weeks back  ==> THIS POST HERE

warning given to VIP members

Now we did not pick and warn members at the top, however it was close as we did notice that the S&P was lying and BONDS were not. Our VIP members got a more detailed warning.

Right now we think we are at a crucial time in the market. Its make or break time, and the bulls and bears are fighting out a long hard battle, but eventually one side will win.

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The bonds chart

The bonds chart

Taking a quick look at bonds, we can see that over the last few weeks, the bonds have produced an ASCENDING TRIANGLE.

These are seen as bullish patterns and more often then not precede higher prices, especially if we break that top resistance point at 133.40 mark.

If we do break this top resistance, that will probably not bode well for the market.  Time will tell.

bonds chart

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Bonds Weekly Chart - The Bonds Weekly Chart

Bonds Weekly Chart 

The Bonds Weekly Chart is clearly in a downwards channel at the moment. With a target of 147. We have noticed over the last week or two money coming out of the stock and equities, and into the USD and bonds.

The Bonds Weekly Chart is also showing us that things are very very oversold longer term. So we would not be surprised to see Bonds Weekly Chart go up and reach the 147 market and then possibly break its falling resistance line and head higher.

The Bonds Weekly Chart is very telling and we will monitor this over the coming weeks.

bonds weekly chart

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bear flag - bear flag on bonds

bear flag - bear flag on bonds

It looks like bonds is showing its true color here. As you can see there is a bearish flag forming on bonds. Once the 147 level is broken, there is real trouble coming, and that will of course cause a rally in the S&P 500 and we should see some sort of rally, as we have been saying.

Bears are probably not going to like what they see in the next few weeks. The reason is the the momentum was up in DECEMBER, and we saw a holiday reversal to the downside. We are now starting to come back into the time period where holiday re-reversals start to occur, which means back to the original trend, which is UP!

A nice bear flag on bonds here at the moment, and we are getting plenty of warning the S&P 500 bulls are not too far away.

bear flag - bond bear flag

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Columbus Day - Holiday Reversals Abound

We got a good jobs on friday, number but we whenever we get up to significant highs the market
does like to do a little back and filling!!! So that is what we got today.

But realistically the markets were overbought short term, and into a long weekend, the market does tend to show reversal signs a day or so before. As you can see on the S&P chart below, we stopped cold at the Sept highs and then sold off into the close.

What I want to remind you here is that MONDAY is Columbus Day in the US so the CME the currencies, the bonds and the CME group is closed. Big traders will likely not be doing much till the middle of next week.

With that in mind, I will not be around posting much till TUES / WED next week.

Happy trading :-)

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Bonds Building - Market Still Tired

Well another red day on the market as we hinted at in the ( VIP ELITE GROUP HERE )

After a few weeks of bonds being very messy, alot of the bonds traders are jumping for joy as the chart has cleaned up a bit. Have a look at the weekly chart on BONDS below. It seems to be forming a bullish flag at the moment. It has not broken yet, and is only "looking" like a bullish flag, because it must break out of this pattern first for more buying to come in. That will put even more pressure on the market.

With the strength in bonds, the market (nasdaq) has now broken out of its upwards channel and the bottom resistance line, and continued down today on WEDNESDAY. If we look back it is obvious that we have not see 3 or 4 down HEAVY down days in a row, so my guess is that the bears still have the upper hand, but there will might be some sort of bounce coming, but we will probably have to wait till next week to see this happen, and also see how bad the bulls want it! :-)

The sentiment right now is still with the bears, and our breadth indicators are confirming that. Happy trading :-)

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