New “Deflationary” ball game could be starting
Well October is almost here and its time for the baseball post season to start today. Speaking of baseball, is a “New Deflationary Ball Game” starting in a variety of assets?
This 5-pack reflects that a variety of long-term support and resistance line breaks are taking place.
The U.S. Dollar (upper left) is pushing above a 9-year resistance line recently. At the same time the TR commodity index, Gold, & Silver are each breaking a support line that has been in place for over a decade. Crude is attempting to break a 5-year support line at this time.
Are we seeing the beginning of a whole new price game for these key global assets?
It is still early in this process. Should the US$ keep pushing higher, these other assets could find themselves a good percentage below current prices.
I have shared for the past two years that Silvers downside target that I am interested in comes into play around the $15 zone, which is fast approaching.
Small & Mid Caps breaking support together! Bearish Signal?
The Russell 2000 & Mid-Cap 400 happened to bottom together in the fall of 2008, ahead of the S&P 500, sending a bullish signal to the broad markets.
Turning the page forward, they both started started reflecting weakness earlier this year after they both hit respective Fibonacci 161% Fibonacci extension levels. Both have been diverging against the S&P 500 for the past few months.
Currently both are making an attempt to break support drawn off the lowest of lows, starting at the 2009 lows.
Both look to have created rather large bearish rising wedges. The positive divergence was a bullish sign in late 2008. Watch to see if the bearish divergence over the past 6 months is a bearish signal for the broad markets.
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Bill Gross & Pimco fund sending “kiss good-bye” message to the broad markets?
In the late 1990’s and 2007 the Pimco High Yield fund (PHDAX) formed bearish rising wedges. Once support broke the fund rallied to kiss the underside of the wedge and its 200MA at each (1), then it proceeded to fall a large percentage in price.
Both times this took place the broad market soon followed the price action of the fund. Were these important “kiss good-bye” messages being sent from the junk bond arena? In hindsight it appears they were.
At this time the fund of late looks to be creating a similar pattern, as it recently kissed the underside of the bearish rising wedge and its 200MA at (2) above.
Bill Gross announced that he was leaving Pimco this morning, is this fund suggesting that investors do the same and exit some broad market holdings due to this price action of late?
In my opinion, the fund’s price action has NOT sent an all-out bearish signal to the broad market at this time as the S&P 500 is just 2% off all-time highs. If we see further weakness from this complex the message would be one I will respect.
Outflows from bond ETF (TLT) largest in 3-years, at this price point!
A sharp 3 week rally in government bond yields looks to have scared many investors. Bloomberg reported this morning that TLT just had it largest daily outflows in three years yesterday.
This selling event looks to be taking place as the yield on the bell weather 30-year bond yield was hitting falling resistance and creating a bearish wick at the same time.
Did the crowd sell a ton of TLT about the time it should have been buying it?