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:
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:
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…)