Master Key for zones
Risk Warning
Trading leveraged products such as Forex, commodities and CFDs, carries with it a high level of risk and so may not be suitable for every investor. Prior to trading the foreign exchange, commodity or CFD market, consider your investment objectives, level of experience and risk appetite. You should never risk more than you can afford to lose. If you fail to understand or are uncertain of the risks involved, please seek independent advice and remember to conduct due diligence.
Firstly why has the SPX and US30 become so bullish?
Simply put, as the FED Funds have been slashed - and with yields being key to movements of both institutional and retail - credit deposits provide a little return so if the trend is up and to the right, then a standard metric is sure, keep on investing regardless of the high value. This keeps the Shiller ratio and price earnings ratio are seen as "this seems fine" (to view the website to review these metrics, click the link below) - www.multpl.com/s-p-500-pe-ratio. To further understand this, the use of the cross-asset comparison shows a simplistic view but also a reality.
SPX Daily chart
A rising channel has always bounced of multiple levels, creating higher lows and subsequently pushing higher towards higher highs to be created.
10 year yields rise, with a 7 year inflation - who would hold bonds during period? The movement of cash exodus from foreign bond holders to place elsewhere has assisted in the fuel.
The money from the bond market flows - will be placed into the SPX or NAS100, Small caps other assets.
Key:
White = channels
Orange = higher high trendline
SPX VS VIX
Refer to the weekly negatively correlated SPX and associated Volatility index.
*Note: please refer to US30 analysis or VIX for inverse relationship of correlation, not causation*
Buying during volatile times, is a strong opportunity to a bullish outlook, the downtrend is not over though, so trade with confirmations.
SPX vs SPX500 50 day moving average
** This is not an absolute, more of a measurement for a risk adjusted scenario of either buy, sell or do nothing.
This shows a strong plunge into the weekly imbalance again, measuring volatility spikes - this is where price offers opportunities to buy in as discounted stocks have shown shakeouts and profit taking.
Of course, this measure is keeping your emotions at bay. Understanding this metric is comparable to the SPX to see where the flows of exodus, the reversion is strong at around the 30.00 zone.
SPX 500 Weekly
Can the market rally from this point or will price break the ray, and continue to sell off?
Or will the -0.618 pivot show a pivotal imbalance test and failure?
Please note, upon a buying confirmation - price will look to now step up to head back towards the all time high, and above.
Current scenario
Trading Strategy upon the all time high and correctional low
Vix Chart - please keep in mind that the VIX has correlation, causation is caused from the associated short term risk of the sentiment change within profit taking, impending policy changes, health warnings, war and other macro-factors.
Current outlook; Using the Daily chart
VIX weekly
Where we are now as at 25/01/2022
Using the tracking below, it is now clear to see the volatility movements which of course takes time to form, but spotting it early like we saw, shows the strong monthly and weekly imbalance which needed a strong suppressive test.
Refer to the DXY chart to follow the imbalance.
The analysis link is attached.
US05, US02 - the yields for short term has been seeing a strong weekly rising movement from tightening as lending rates are higher, saving rates are higher, so the shift of movement has been clear upon a transition. This forms the technical imbalance - from here on the daily chart - the range has established itself from forming 'swing highs, swing lows' this will now attract a consolidative zone.
Buying here is imminent, but from a risk adjusted scenario for SPX, US30 USD pairs which are favourable trading opportunities, understanding this chart assists in the decision making process.
Ratio of TLT / JNK
This is the relationship between Treasury linked high quality grade which are low probability of default
JNK is a higher rated spread where bonds have a higher probability of default.
Credit spread is the outcome.
TLT begins to rise, JNK begins to fall - provides/indicates a risk-off imbalance to look towards.
A technical tool - using the ray for the log of the weekly and monthly. the reactions have been clear targets where price can look to correct to.
Looking to see the ratio fall towards <1.24 to become a risk off scenario.
Consumer Sentiment Weekly UMSCENT
The Fed has been consuming QE, but ultimately will raise inflation if they feel necessary - despite after down turns.
Monetary policy can either tighten or never tighten again - the university of Michigan tracking of consumer sentiment has provided key information that the "average person" is feeling the crunch, where the down turn of sentiment highs have created a low on the weekly, and bounced back, but ultimately now is beginning to show signs of bearish action, where consumer lows at the monthly imbalance - shows Fibonacci retracement extension targets align.
FRED - GFDEGDQ188S
Weekly chart of the M2 vs Total Public DEBT against GDP vs SPX500
The chart shows a crossover now where the SPX has tightened drastically in line with the M2 now at a positional point where the daily chart to scale in shows that this could become parity where all the M2 supply is funneled into the stock market.
What happens when SPX crosses M2?
The overall value here shows the proposition of the market is showing all market participants are in the market investing and holding profits, adding, any leverage control is added.
10Year bonds vs 10Year Breakeven Inflation rate
Currently the 10YIE sits at 2.4 or 2.41% vs the 10 year yield at 1.845%, however the YOY situates itself at a level of 7.0%
Now what does this suggest for Foreign bond holders as a measure of return and also cash held in bank deposits, under the bed or cash circulation in general? Inflation will impact in the short term sure, but from an imbalance standpoint from the supply and demand metric. Bond holders will move from yields < inflation rate and look to deposit funds, profits into risk-on assets, so the cycle here moves from surplus in one asset and shifts to another. Being SPX, US100, BTC, ETH and or single stocks.
From the increase in prices in everyday items, investing within these sectors also perceive a strong correlation .
Review CPI for the fed rates provided.
https://tradingeconomics.com/united-states/inflation-cpi
ST LOUIS FED 10year breakeven chart
https://fred.stlouisfed.org/series/T10YIE
Do you enjoy the setups?
Professional analyst with 5+ years experience in the capital markets
Focus on technical output not fundamentals
Position and swing trades
Provide updates where necessary - with new updated ideas tracking the progress.
If you like the idea, please leave a like or comment.
To all the followers, thank you for your continued support.
Thanks,
LVPA MMXXII
- Red = Three Month
- Blue = Monthly
- Purple = weekly
- Scarlet - Four day
- Orange = Daily
Risk Warning
Trading leveraged products such as Forex, commodities and CFDs, carries with it a high level of risk and so may not be suitable for every investor. Prior to trading the foreign exchange, commodity or CFD market, consider your investment objectives, level of experience and risk appetite. You should never risk more than you can afford to lose. If you fail to understand or are uncertain of the risks involved, please seek independent advice and remember to conduct due diligence.
Firstly why has the SPX and US30 become so bullish?
Simply put, as the FED Funds have been slashed - and with yields being key to movements of both institutional and retail - credit deposits provide a little return so if the trend is up and to the right, then a standard metric is sure, keep on investing regardless of the high value. This keeps the Shiller ratio and price earnings ratio are seen as "this seems fine" (to view the website to review these metrics, click the link below) - www.multpl.com/s-p-500-pe-ratio. To further understand this, the use of the cross-asset comparison shows a simplistic view but also a reality.
SPX Daily chart
A rising channel has always bounced of multiple levels, creating higher lows and subsequently pushing higher towards higher highs to be created.
10 year yields rise, with a 7 year inflation - who would hold bonds during period? The movement of cash exodus from foreign bond holders to place elsewhere has assisted in the fuel.
The money from the bond market flows - will be placed into the SPX or NAS100, Small caps other assets.
Key:
White = channels
Orange = higher high trendline
SPX VS VIX
Refer to the weekly negatively correlated SPX and associated Volatility index.
*Note: please refer to US30 analysis or VIX for inverse relationship of correlation, not causation*
Buying during volatile times, is a strong opportunity to a bullish outlook, the downtrend is not over though, so trade with confirmations.
SPX vs SPX500 50 day moving average
** This is not an absolute, more of a measurement for a risk adjusted scenario of either buy, sell or do nothing.
This shows a strong plunge into the weekly imbalance again, measuring volatility spikes - this is where price offers opportunities to buy in as discounted stocks have shown shakeouts and profit taking.
Of course, this measure is keeping your emotions at bay. Understanding this metric is comparable to the SPX to see where the flows of exodus, the reversion is strong at around the 30.00 zone.
SPX 500 Weekly
Can the market rally from this point or will price break the ray, and continue to sell off?
Or will the -0.618 pivot show a pivotal imbalance test and failure?
Please note, upon a buying confirmation - price will look to now step up to head back towards the all time high, and above.
Current scenario
Trading Strategy upon the all time high and correctional low
Vix Chart - please keep in mind that the VIX has correlation, causation is caused from the associated short term risk of the sentiment change within profit taking, impending policy changes, health warnings, war and other macro-factors.
Current outlook; Using the Daily chart
VIX weekly
Where we are now as at 25/01/2022
Using the tracking below, it is now clear to see the volatility movements which of course takes time to form, but spotting it early like we saw, shows the strong monthly and weekly imbalance which needed a strong suppressive test.
Refer to the DXY chart to follow the imbalance.
The analysis link is attached.
US05, US02 - the yields for short term has been seeing a strong weekly rising movement from tightening as lending rates are higher, saving rates are higher, so the shift of movement has been clear upon a transition. This forms the technical imbalance - from here on the daily chart - the range has established itself from forming 'swing highs, swing lows' this will now attract a consolidative zone.
Buying here is imminent, but from a risk adjusted scenario for SPX, US30 USD pairs which are favourable trading opportunities, understanding this chart assists in the decision making process.
Ratio of TLT / JNK
This is the relationship between Treasury linked high quality grade which are low probability of default
JNK is a higher rated spread where bonds have a higher probability of default.
Credit spread is the outcome.
TLT begins to rise, JNK begins to fall - provides/indicates a risk-off imbalance to look towards.
A technical tool - using the ray for the log of the weekly and monthly. the reactions have been clear targets where price can look to correct to.
Looking to see the ratio fall towards <1.24 to become a risk off scenario.
Consumer Sentiment Weekly UMSCENT
The Fed has been consuming QE, but ultimately will raise inflation if they feel necessary - despite after down turns.
Monetary policy can either tighten or never tighten again - the university of Michigan tracking of consumer sentiment has provided key information that the "average person" is feeling the crunch, where the down turn of sentiment highs have created a low on the weekly, and bounced back, but ultimately now is beginning to show signs of bearish action, where consumer lows at the monthly imbalance - shows Fibonacci retracement extension targets align.
FRED - GFDEGDQ188S
Weekly chart of the M2 vs Total Public DEBT against GDP vs SPX500
The chart shows a crossover now where the SPX has tightened drastically in line with the M2 now at a positional point where the daily chart to scale in shows that this could become parity where all the M2 supply is funneled into the stock market.
What happens when SPX crosses M2?
The overall value here shows the proposition of the market is showing all market participants are in the market investing and holding profits, adding, any leverage control is added.
10Year bonds vs 10Year Breakeven Inflation rate
Currently the 10YIE sits at 2.4 or 2.41% vs the 10 year yield at 1.845%, however the YOY situates itself at a level of 7.0%
Now what does this suggest for Foreign bond holders as a measure of return and also cash held in bank deposits, under the bed or cash circulation in general? Inflation will impact in the short term sure, but from an imbalance standpoint from the supply and demand metric. Bond holders will move from yields < inflation rate and look to deposit funds, profits into risk-on assets, so the cycle here moves from surplus in one asset and shifts to another. Being SPX, US100, BTC, ETH and or single stocks.
From the increase in prices in everyday items, investing within these sectors also perceive a strong correlation .
![Oil still pushing to $100 [VIP]](https://s3.tradingview.com/d/dff19HQY_big.png)
Review CPI for the fed rates provided.
https://tradingeconomics.com/united-states/inflation-cpi
ST LOUIS FED 10year breakeven chart
https://fred.stlouisfed.org/series/T10YIE
Do you enjoy the setups?
Professional analyst with 5+ years experience in the capital markets
Focus on technical output not fundamentals
Position and swing trades
Provide updates where necessary - with new updated ideas tracking the progress.
If you like the idea, please leave a like or comment.
To all the followers, thank you for your continued support.
Thanks,
LVPA MMXXII
