This is some commentary on the “one stop chart” from this posting:
with some minor variations (like a full SMA Simple Moving Average stack)
It has a broad swath of “things” on it. A bit of oil, some grains, gold, stocks, bonds, copper, etc.
In one look you get a quick “feel” for what’s moving and which way.
Here is a static image as of today:
OK, “Uncle Ben” told us all he was going to start to “taper” off bond purchases (as long as the economy was showing signs of life…) ‘sometime’ later this year, and ending the taper ‘sometime’ middle of next year. He’s announced ‘last call’ at the punch bowl ‘soon’. So loads of folks are running around in a tizzy as they are about to have withdrawal symptoms. In particular, bonds will drop (and note on the chart that TBT is going up).
Yes, that chart is cluttered, but you can pick out bits. First off, stocks have had a ‘go flat’ moment. The “juice” that has been holding them up is about to end. Unlikely to be a lot of gain going forward, but not yet falling. SMA stack is going into a ‘weave’, not yet inverted. Bollinger bands narrow and flat. RUT above the SPY (as the broad market often over runs both ways, that shows we’ve been running up, and may turn. Yet RUT has not yet started leading down). There’s a bit more weakness in the QQQQ as it is not quite ‘dead flat’ but a bit down slope at that tail / ‘flat’ area. Not good. Unfortunately, since the colors are hard to keep separate, it’s hard to see, but JJC copper continues low / down while the similarly redish TBT ‘short bonds’ is rising sharply. Copper says we’re not yet in a real manufacturing growth phase. Yet oil is rising, costs up. And Gold GLD continues to run downhill. (Looks like that “be out of gold” from way back months ago was not too bad a call.) So “what’s next”? All I’m seeing that looks interesting at the moment is the “short bonds” trade.
The interesting thing to me is that TBT showed the change 2 months back while TLT reflects it 1 1/2 months back. Somebody read some tea leaves right (or have ‘friends in high places’). So had I not been so focused on getting a new job and relocating to Florida, I’d have been able to see this coming about 4 weeks ago (after the chart had a decent sized trend established). Sorry to have been slow on the call on that one.
A live version:
I had said before that:
It is possible, in Windows, to set that chart as your “Wallpaper” and have it automatically update every so often. ( I had mine set to about 10 am each day, once opening volatility was out of the way and a reasonable ‘trend’ indicate was possible). Then if you see something interesting, hop over to BigCharts.com and explore related tickers.
It looks like in the more recent versions of Windows they have disabled this feature for “security reasons”.
SPY - S&P 500 - the Benchmark for all other tickers GLD - Gold ETF - Fear and Inflation index RUT - Russel 2000 index ETF - Broad market and small caps EEM - Emerging Markets ETF basket JJC - Copper ETN - Broad manufacturing indicator TIP - Treasury Inflation Protected bonds - Benchmark safe haven. USO - US Oil ETN - energy sector AND broad economic indicator QQQQ - NASDAQ 100 - Tech indicator - more consumer sensitive less financials JJG - Grain ETN - Ag proxy and weather sensitive TLT - US Treasuries long duration - "Flight to safety" indicator and moves more than TIP
Here’s the same chart with GLD as the main ticker (so I clicked on the Bigcharts link, then just changed the main ticker to GLD as it looked interesting on the basic chart):
Gold is clearly in a long term dropping market. Hanging below the SMA line. Yet perhaps nearing a bottom. We’ve had a ‘failure to advance to the downside’ at about $1290 or so a couple of times now. RSI bouncing off 20. It needs to have an SMA stack weave (not visible on a single SMA chart like this) and then a crossover to the topside. MACD needs to cross the zero line to be a confirmed bull market (and that can be a bit after a run up is established). IMHO, it’s near (or perhaps at) a bottom. But I’d not buy it until there’s some signs of life. It is possible that as Bonds drop (see that down trending TLT line above) some folks will ‘run to gold’ for ‘safety’ and send it up a bit. IMHO, the better trade is to short bonds. With the Fed withdrawing purchases, interest rates WILL rise, and bond prices drop. Uncle Ben has told us we have that, if slowly, for the next year. “Never fight The Fed”…
Some general comments on what each ticker tells you in a general sense (i.e. not which way it is trending at the moment):
So looking at the individual tickers tells a lot. Is oil plunging? Longer term that’s good for the global economy, but usually means the economy is tanking right now. Has oil taken a spike? Maybe a war breaking out somewhere or news of economic growth starting.
Is copper falling? Not much stuff being sold / manufactured.
Are grains rising or falling? Drives food costs, drives Ag Industry sales, even impacts restaurants and meat prices.
How do Emerging Markets, RUT 2000, Nasdaq 100 and SPY compare to each other? Emerging markets often move first and furthest, RUT right behind. If they are below the more staid SPY, likely a bear market. If they spike up, we’re likely starting a nice run up. QQQQ has been beating them all, and rolled over last. It will likely roll up near the middle (or perhaps earlier than most) and run faster up when it does. But not all trends last forever, so don’t get wedded to QQQQ; it can have a “Tech Bubble” moment…
GLD TLT and TIP make a “Flight to Safety” and “Relative Fear” indication. TIP vs TLT is also a bit of an inflation indication. TIP has an inflation index ticker so rises when inflation erodes TLT. TLT bounces up more on fear moments and Federal Reserve Bank actions. Gold is largely driven by Central Bank buying and selling, but with about 25% being gold sales into India. When India is in recession, that’s a problem. When Central Banks are scared, they buy gold, and that props up the price. Right now it’s mixed.
So you can look at this one graph, and get a quick feel for fear in the market, fundamental inflation in real terms, Oil Shocks and what they might be doing – or oil glut in recessions as they approach, food pressures and Ag status, along with general demand for manufactured goods and a broad economic indication. Then compare the stock indexes ( SPY, RUT, QQQQ, EEM ) and see if the more volatile / sensitive ones are leading in a direction you like… or are they approaching an inflection point? Also these things together indicate: is it time to go “Risk Off” into a “Flight to safety” asset, or “Risk On” into stocks and other risk assets.
One quick look and you are rapidly “oriented” to the situational awareness of the global markets.
So that’s why I’ll often just look at this One Stop Chart and figure there isn’t much to do…
With that said, many of these have been dropping long enough that RSI is at or near 20. That’s typically bottom fishing time and a rise, even just back to the SMA stack, is likely. I’ll trade those movements on a 10 day hourly chart until a new rising trend is confirmed. These are going to be “counter trend rallies” until then, so short fast trades up to the SMA stack, then out for the fall (or buy puts behind them).
Advanced style trades are to buy the puts AND put stop loss sell orders behind the stock. If prices fall, you are stopped out of the ‘long stocks position’ and make money on the puts. If prices rise, you stay long the stock (making money) and the relatively cheap insurance of Puts expires worthless; but you dramatically reduced your risk profile and were positioned to make money with either directional move. That’s the kind of thing you need to do if ‘going long’ in a ‘counter trend rally’. Not just “buy the stock and hope”.
“Hope is not a strategy. -E.M.Smith”