SPY goes flat, TLT rising

It looks like SPY has joined the “gone flat” club, while bonds, TLT, has a consistent rise with an uptick at the end. Commodity indicators are still trending down, and markets outside of the USA are “not good”. Not seeing how the USA can pull the global economy out of this dumper, especially with the conflicts going on, an uninterested President doing “all the wrong things” for the economy, and Russia looking to stir the pot.

No big future vision yet, but with The Fed talking ‘Rate Hike Someday’, normally folks would be leaving Treasuries. That they are ticking up says it’s a “Fear Trade”. So who’s afraid, of what, why, and for how long? That determines the length of this run up in TLT. Given the poor performance in oil and China, I’d expect more cashing out than demand for US Treasuries. All I can figure is some banks somewhere might be buying them. (The Fed or IMF or ???) Or maybe a lot of folks with tanking currencies are seeing them as an easy way to “dollar diversify” while not hitting the foreign exchange market… But “It is what it is. -‘Paul The Mercedes Mechanic'”.

First up, the TLT chart:

TLT Vs Treasuries fund vs stocks and commodities 11Jan2015

TLT Vs Treasuries fund vs stocks and commodities 11Jan2015

Ticker cleanly above the SMA stack. RSI consistently above the midline. MACD with blue on top and cleanly above the midline (hand has been for a while). DMI has “blue on top” and the black ADX strength line way above 20 so ‘with some strength’.

Then the SPY chart:

SPY vs multiple markets, commodities & bonds 11Jan2015

SPY vs multiple markets, commodities & bonds 11Jan2015

RSI has had a ‘near 80’ moment, then dribbling down since then. MACD inflected to red on top, and weakening to have more time ‘below the midline’. DMI is ‘red on top’ but the ADX strength line is nearing 20, so little trend and weakening (how it looks when a trend up is going flat before a reversal – or occasionally a change of news can cause a resumption of the prior run – but it’s “going flat” now).

Also the SMA stack has a change of slope to ‘near flat’ and the “topping weave” where the lines start crisscrossing is evident. RUT is cleanly below SPY, so “run to quality” has begun (or “run to safety” or “risk off” trade profile.)

Then we have a continuation of all the prior trends in “the other stuff”. Gold GLD and copper JJC both continue down. EEM Emerging Markets continue to fade (that might be US $ strength – ought to do an FX compare.) EZU the EU basket, is also clearly trending down. The only real surprise is FXI (that is not an FX ETF but a China 25 Index ETF) is sort of ‘rolling sideways’. Not growing, not dying, and given the peg to the $US, not a lot of FX influence on it.

So, all in all, it’s looking like the “run up” is over everywhere else in the world, and the only rise is in a “risk off” trade into $US and US Treasuries. I’d be careful on that, as The Fed at any time can start raising rates and break that trade. (Or peace could break out and the new congress could find Obama suddenly interested in economic performance over political correctness… yeah, right…)

In short, cash is not so bad a place to be, and ‘secure cash’ even better ( Swiss Franc, $US, etc.) with some value in the bond trades. But the risk is still in the US stock market while the rising trend is leaving. Still better than many other markets, but not a big win. Time for individual “stock picking” and emphasis on dividends / returns, not “growth at any price” and “risk on”… at least, that’s what I’m seeing. YMMV.

(Nothing here is individual financial advice, nor anything other than a description of how I read and interpret charts. Educational / entertainment value only. Etc. etc…)

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About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
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11 Responses to SPY goes flat, TLT rising

  1. Richard Hill says:

    EM: If the ecomony was like a farm, it appears to be that the farmer gets lots of advice about watering the fields, applying fertilizer, etc etc. Some times the economy/farmer follows this advice.
    But non one mentions seeds. You can read finance and economic advice till your eyes glaze over, but never find some advice about seeding the economy. Firms go bust all the time. Why does no one ask “where do new firms come from?” Is there some way to make money from this lack of balance?

  2. E.M.Smith says:

    @Richrd Hill
    Maybe running a magazine or writting a book, but it isn’t hidden knowledge. There are tv shows where folks pitch their ideas to ‘venture capitalists’ for funding. And bank loans or using your own money are kind of obvious. Then things like franchise operations have dozens of books. Maybe an overview of the forms would make a decent article on a blog.

  3. E.M.Smith says:

    Oh, and I left “Government Funding” off my short list as it is rarely successful at creating businesses that can “stand on their own feet” and abysmal at creating net increases in real wealth (as opposed to redistributing tax dollars to “Friends Of The Government”…)

  4. p.g.sharrow says:

    It appears that the Saudi’s are planning on depressing oil prices for as long as 5 years to to drive out competition production. Oil prices of present of $45 may drop to the mid 30s, I would guess $32 to $36 as the break point. Most of the major oil exporters have a heavy dependence on oil revenue for social management and International adventures, So this could really cramp their style. Russian and Muslim Warlords are both very dependent on oil money for their sustenance.
    China has about completed their build out so all commodities look to be down as the world economies slow.
    The Americans can play both sides of this change. As long as fuel is down there is more money out on the street in peoples pockets so the real economy is getting a much needed shot in the arm just as government mandated costs are increasing. Now we are hearing Congress critters salivating over an opportunity to push a large increase in fuel taxes for “infrastructure” ROADS and BRIDGES. Oh yes and high speed rail projects that no one really wants More bike paths etc. “You should never give a sucker an even break” politicos.
    Bankers and Wall street mavins are crying the blues due to reduced profits in the oil patch. Win a few and then lose some. pg

  5. p.g.sharrow says:

    Just now, an analyst on FOX Business points to nearly one $TRILLION dollars more in the pockets of the American man on the street over the next year! A real stimulus for the citizens this time. pg

  6. E.M.Smith says:

    @P.G.:

    While it is a real stimulus to the Average Joe, I do have to point out that it is NOT new money in the pocket, only less of it being pick-pocketed…

    The real problem is that we are in a Race Condition. How fast can the real economy get moving, vs how fast can the leaches suck it dry. While a $TRILLION sounds like a lot, it is a small part of what is the real national economy.

    So, take me, for example. My (fairly well priced but much less than 10 years ago) contract here just ended. While I liked the money, it was about 2/3 my prior California “bill rate”. It would take about 6 times my daily gasoline costs to make up the loss on one HOUR of my time.

    With that contract ended, I’ve picked up a fun gig for “lunch money” teaching English as a Second Language. Pays about 1/4 of my most recent contract rate. I would need to make my WEEKLY gasoline budget twice per HOUR added to that pay to be at the same income as last month.

    In 3 weeks I’m unemployed and with no income.

    Now stack that up against me having about $60 less gasoline costs this month. Doesn’t even come close to making up for it.

    (Yes, someone on a ‘fixed income’ or gub’mint job, or someone on minimum wage and keeping the same hours; they will notice a difference… but then again, Obamacare is having a bite at the paycheck, and many folks are getting “part timed” to avoid it… )

    All in all it is very unclear if this is a ‘net win’, or just a slower rate of bleeding to death…

    Another way to look at it is that insurance and the car payment dominate car costs. The gasoline is down in the Starbucks-A-Day range for lots of folks. At the end of the month, few will notice the net-net. (Maybe Starbucks will ;-)

    That’s the big problem with Macroeconomics and Gubmint think. All the numbers are huge, so they think it will do something. But the reality is that the Real World is bigger, does more, and largely can only be damaged by Government “help” and bright ideas… or changes of gasoline costs in the $1 / gallon range… (vis. your report of poly-tick-ians already looking to spend it with contributor cronies and Friends-Of-Bigger-Gov’t… )

  7. bob sykes says:

    Considering the downtrends in so many commodities, it does look like deflation is settling in, especially since all the QE’s in the US, EU and Asia did nothing to inflation.

    If true, cash is the best harbor.

  8. p.g.sharrow says:

    EMSmith:”In 3 weeks I’m unemployed and with no income.”

    With the end of your employment, you will once more have the opportunity to make money ;-)
    “As long as you work for a living you will never make money.”
    About time you directed your vast talents to the acquisition of wealth. At your age you are not likely to be offered employment at a rate commensurate with your abilities. Unless of course one were to want to create a new computer system with built-in security and needed a ramrod. 8-) pg

  9. E.M.Smith says:

    @P.G.:

    When the bills are larger than the money in hand, and next month is worse, one does not get to do what they desire, but must do what is required. I ALWAYS have the “opportunity to make money”, the only questions are “How much. For whom. Doing what.” I spent nearly a decade with “For whom?” being “for me”; but for the last couple of years it had to be “for someone else” as that was the level of income that covered the bills. Such is life.

    I’d devoted my talents (vast, or half-vast ;-) at acquisition of wealth for about 30 years. That was WHY I could spend a decade on “my stuff”. So now I need a bit more time in the saddle (or with the bit in my teeth ;-) so that the I can do another decade or three on “my stuff”.

    As per “bill rate”: It varies with the market mostly, with me only a little. One of the things you learn as an independent contractor. Largely “bill rate” is not about you. It is about what the service is worth to the customer. Right now the market is trending up, so I expect I can find something at a decent rate. Just a question of “For whom? Doing what?” and maybe a little bit of “Where?”. I’ve “billed out” at anything from $50/hr to $120 ish / hour. It depended mostly on the type of work and what the customer thought it was worth. (I’ve been billed at $1000 / day for over a year on one military related contract. They have an odd sense of ‘worth’ ;-)

    I’ve also been “self employed” most of my working life. (Assuming that contracts like my last one, where the ‘client’ wanted me W2’ed to an agency for their own reasons still counts as ‘self employed’… my relationship with ‘the agency’ was only that they handled the paperwork…) I’m well aware of the difference between being an “employee of the patron” and being a hired gun on your own… (Just call me Paladin…)

    Per “ramrod”: Be advised that I have a non-linear response to being ‘expedited’. The more I’m pushed, the more I resist being moved; eventually ending up at being in retrograde… You can see that in how “expedites” on topics are generally handled here. A question on M.J. was raised on in inappropriate thread. I engaged a little, but said “let it rest, I’m working on a posting” (more or less). More ‘expedites’ resulted in a cancellation of the article, and adding M.J. and the chemical agents to the “moderate” key word list. I’ve got a load of info to make a decent article, but now can’t quite get around to writing it. The “negative vibes” turn me away.

    Per secure computing: What makes you think I’ve NOT been working on it? It is not a quick, nor easy, thing. The biggest problem was the move by PCs to a BIOS that is almost certainly NSA backdoor-ed. How can you make a secure OS, if it is essentially a ‘guest’ on a BIOS that is a black box, comes from vendors in bed with the NSA, and has quite likely been completely buggered? (IMHO, that is also why TrueCrypt gave up. They realized it was not secure in that context.) I’ve more or less figured out the OS approach (posted a while ago) as a Kylin like OS based on OpenBSD. Probably about a month of work to get a fairly secure install and some ‘pruned back’ services and onto a DVD / torrent distro. But that is less than useless if it sits on top of 100 MB of “unix like” BIOS that has been carefully made “secure” by companies in the PRISM program… So I had to go hardware shopping.

    That (believe it or not) ended up at the ChromeBox. It has a “developer mode” that looks like it lets you do what you want to the BIOS, and a BIOS that is open source. (Still needs a bit more poking and prodding to assure that there isn’t a hidden buggerage, but it looks like an OK approach. The RPi also would work, but is a bit under powered. There are a couple of other boards, and I’m likely going to make a ‘cluster’ of a couple of them as a test bed).

    I’ve also got a fairly good systems design for the “wrapper” of services around the box. Why do you need that? Because the NSA has decided to attack things like your boundary router and your DNS services. (See the Snowden docs). So I spent a couple of months on that. (You need your own ‘locked down’ boundary router that runs from ROM, not anything writable, and is rebooted for each session. Also a personally managed DNS with many (most?) of the entries static so a ‘man in the middle’ can’t bugger your DNS and route your traffic to them. Not ‘enough’ since they can change the router tables in the Common Carriers, but better than nothing… and ought to prevent non-NSA non-Govt non-ISP DNS buggering… but really needs more. Like a Dark Net inside the Common Carrier net with structure not pwnable by them…)

    At any rate, a lot of that stuff is written up. But I’m not interested in publishing it ‘just yet’ as that would just give folks a head start on breaking it.

    So that’s “where I’m at”. ChromeOS is clearly designed to “share all” with Google, and that means that via them, it is all shared with NSA, their friends, and any other governments or hackers that have figured out how the backdoors work ( I’ve not done that yet, but most of it looks to be ‘cloud based’ to prevent non-Google&NSA access). HOWEVER, the folks who designed it have done a decent job of keeping everyone ELSE out, near as I can tell. It’s a very nice “appliance” for a couple of uses. And the BIOS looks clean (on a first pass) while the ability to run your flavor of Linux / BSD on top makes it suitable (IMHO and “so far”).

    I expect that in about a month, I’ll be running a Linux / BSD on it. (one small problem is that when you put it in ‘developer mode’ it resets the ChromeOS part to ‘factory default’. So anything you have done ‘to date’ gets wiped. A nice security feature in one way in that folks can’t steal your stuff – other than Google/NSA – but it makes it a pain to convert if you have actually used it. (I’ve tended to keep any downloads on a USB dongle, but it still needs a ‘weed and save’ process just to be sure.)

    At any rate, the bottom line is that I’ve now got “acceptable first cut” hardware and a “probably OK and replaceable BIOS” on a box with enough performance and a low price. Comes with a very usable “cover story” OS for things like browsing Tech sites and runs video well for watching things like Bambi Meets Godzilla… and you can save GB of Linux binaries and climate data in “the cloud”… Then boot a locked down BSD, Tor, and more, in a private partition on a USB stick or SD card (locked), using dedicated infrastructure “wrapper”, and be fairly secure against most crap. Likely still hackable by NSA folks as they have a butt load of “magic dust”… (like being able to get both your hardware vendor and your ISP to “cooperate” along with the telcos and have a staff of thousands to apply to the ‘problem’…) But if used ‘with discretion’, with reboots from ROM between uses, with ‘interesting’ monitoring, and with ‘rotate the shields’ changes of location ( i.e. public WiFi hotspots) would likely be “safe enough” for most uses and would raise the cost of hacking you high enough that you would need to be a ‘person of interest’ for them to spend the money (unlike now where everything you do is ‘open and free’ so they just suck it all up…)

    So, you see, I’ve not been exactly sitting on my thumbs…

    But now I need to think about what damage sharing this has done to the usability of it… while ‘security by obscurity’ is usually transitory… it IS another layer of advantage…

  10. Larry Ledwick says:

    The BIOS hardware has always been the weak point of any system since you have no visibility into what it does. You just take it for granted that it is secure and bug free. Same for commercial OS system, no means to audit the code you just have to take it on faith that somewhere in that few million lines of code there are no obscure exploits waiting in the dark corners.

    For a really secure system, you need a really low level boot strap that does one thing and one thing only which is read in your boot loader (which you know exactly what it does). Back in the early 1970’s on board ship to boot our Univac system we used a switch combination on the front panel which wrote a few bits to a register to trigger the reboot, as that register was the address of the next executed command and the boot routine. Kind of hard to remotely bugger manual switches on the front panel.

    Ahh the security of rock simple brute force basic execution. By definition the more stuff it does on boot up the more opportunities for some unexpected result to be included in the boot routine if you do not have visibility/control over what it does. For the security issues black box code modules are evil.

  11. p.g.sharrow says:

    @EMSmith; “Security through obscurity” and non-publishing the FM is the wisest policy.
    My lady and I have been surviving on the financial edge for the last couple of years but this one looks much improved. In our lives this is normal, so, no big thing. GOD does not always give you what you want but, generally gives you what you need. ;-) maybe GOD will smile on all of us this year. 8-) pg

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