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Categories:General Market Commentary
THIS IS A GOOD CHART TO SWING TRADE KEY INDICATION IS CROSSING OF THE LINES AND TOUCHING THE BOLLINGER BANDS.
Any small move in NAMO then bigger move in 2 Days. This is a powerful indicator.
The numbers to the right of the chart is the % percentage that are above their 50 Day Moving Average. This is very healthy. The Green and Orange is a good visual.
THERE ARE MANY ARTICLES ON THIS TOPIC HERE ARE THREE TO READ. It is important to keep a level head and look at several indicators such as housing, transportation, unemployment.
Start by reading this article first, A quick section of the article.
Does Yield-Curve Inversion Guarantee a Recession? Here?s something to keep in mind, though. While the US has never had a recession that wasn?t preceded by an inverted yield curve, not every curve inversion has been followed by a recession. As the following Display shows, during the five mild inversions of the yield curve between 1986 and 2001, the US stock market returned an average of 15% in the three years following the flip, starting the month the inversion occurred. Those inversions were not followed by recession. And when the curve inverted in July 2006, it took two years for the equity market to correct.
When Is The Next U.S. Recession And Bear Market https://www.forbes.com/sites/jessecolombo/2018/09/14/when-is-the-next-u-s-recession-and-bear-market/
At the current rate the yield curve is flattening, many economists estimate that the yield curve may invert as soon as December 2018, so we will use that time frame for this exercise. It took an average of 9.7 months between the time that the yield curve inverted and the stock market peaked, which means that the current bull market would peak in September 2019. It also took an average of 5 months between historic market peaks and the start of recessions, which means that the next U.S. recession would start in February 2020, assuming the current cycle follows the historic average perfectly.
Date the Yield curve inverts --- Months till start of Recession
JANUARY 1973 10 MONTHS
SEPTEMBER 1978 17 MONTHS
SEPTEMBER 1980 8 MONTHS
JANUARY 1989 18 MONTHS
FEBUARY 2000 12 MONTHS
FEBUARY 2006 20 MONTHS
Average 9.7 months + 5 months 14.1 months (read above)
''Projecting that yields will stay low, J.P. Morgan analysts also recommended selling cyclical stocks, as their prices are affected by ups and downs in the economy. As the following chart shows, stubbornly low Treasury yields suggest sluggish economic growth which in turn hurts cyclicals.''
The essential take away from this is that low Treasury yields are the result of high demand for the 'safe haven' parking of money.
This is due to the belief, and not an unsubstantiated one, that the general economy is NOT doing as well as the central government and financial media are portraying.
This reflects the general mindset that people are seeing a much more dangerous economic environment and are trying to 'protect' their capital, even if it means diminished returns, vs. risking it in equities and the like
Abstract from a article in 2009: watch the BLUE Line
remember this is from 2009
CRB Index (blue line) falling to new lows. Bond yields are now at the lowest levels in sixty years. Over the past few years, a positive correlation has existed between commodity prices, bond yields, and stock prices. Falling commodity prices imply global economic weakness. Falling bond yields imply the same. A collapsing Euro (along with foreign stocks) is pushing money into the relative safety of Treasuries and the U.S. Dollar. Rising bond prices equate to lower yields. A rising dollar equates to falling commodity prices. Falling bond yields and commodities leading to falling stock prices. The rising dollar is also taking a more serious toll on foreign stocks. Their technical condition looks a lot weaker than the U.S. Problem is weakness there causes weakness here as well.
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