31 replies to this topic

[dTraderB]

Quietly down this morning

Let's see if I can milk another 5 points from this NQ short

 

Possible scenario today: 3 major moves - 

down

up

down

 

but could not be surprised to see SPX closing above 2825

[dTraderB]

10yr Treasury below 3%

 

Keith McCullough‏Verified account @KeithMcCullough 8m8 minutes ago

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In today's Early Look, "Did You Sell Yesterday?" I review the 3rd best Selling Opportunity since SEP and why I am long of the Long Bond

 

10-year U.S. government bond yield pushes below 3% as stocks come off highs

https://www.marketwa...ting-2018-12-03

 

[dTraderB]

 @NorthmanTrade

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That break may come from higher of course. As you may have seen from my articles there is still potential for a higher fib alignment with a possible target at 3043 $SPX. I repeat: Nothing's broken yet.

4:30 AM - 4 Dec 2018

[dTraderB]

The whole world is watching the YIELD CURVE inversion?

 

 

A crowded trade?

 

The most reliable indicator in the market

First things first, what’s a yield curve?

Let’s go back to basics. Two acquaintances, both with the same credit record and standing with you, come and ask for a loan. One wants to borrow the money until this time next year. The other wants to borrow the money for a decade.

Who do you charge more interest?

The answer, obviously, is the person who is borrowing for a decade. You have a rough idea of what the world will look like in a year’s time. You have almost no idea of what it will look like in ten years’ time.

Your acquaintances might both be good people with solid jobs and a record of repaying their debts. And a year from now, their circumstances, your own, and the condition of the world probably won’t have changed much.

But in a decade? Your borrower might lose their job. They might get divorced. Rampant inflation could take hold in the wider world. Your own situation might deteriorate and you might want the money back in a hurry.

In short, lending for ten years is riskier than lending for one, and so you ask for more interest to compensate.

The yield curve simply shows this on a graph. It shows how, in normal times, the interest rate on a loan rises along with the loan period. So the yield curve for the US Treasury (US government bonds) market will slope upwards as it goes from the yield on the two-year bond, to that on the ten-year.

With me so far?

An inverted yield curve is what you get when the yield curve slopes downwards. In other words, investors are asking for more interest on short-term loans than on long-term ones.

That doesn’t happen often. It usually only happens when investors expect a recession and are therefore clamouring for the perceived safety of US government bonds.

In fact, “every US recession in the past 60 years was preceded by... an inverted yield curve,” note Michael D Bauer and Thomas M Mertens of the Federal Reserve Bank of San Francisco in a paper on the topic.

Now, that doesn’t necessarily mean anything. After all, a stopped clock is right twice a day. So to get any value from the inverted yield curve, you also have to ask – how many false positives did it generate?

The answer to that is impressive – only one. And on that occasion, the economy did slow down, in any case.

To be more specific, every time the yield curve (as measured by the difference between one and ten-year Treasury yields – other people more commonly look at the gap between two and ten-year) turned down between 1955 and 2018, a recession happened within two years.

The single false alarm happened in the mid-1960s “when an inversion was followed by an economic slowdown but not an official recession”.

So that’s a very good record. And while you can argue that there are lots of aspects of today’s interest-rate environment that are almost unique, I’d still be reluctant to toss aside an indicator with that kind of hit rate.

So why are we bringing it up now?

https://moneyweek.co...curve-recession

 

[dTraderB]

Busy day

FRIDAY's SPX high was 2760

Important level

 

MONDAY's SPX high was 2800

Another important level

 

Break of either level will determine ST, and possibly IT, direction

[dTraderB]

Quick one:

possible ST low at SPX 2735/30

[dTraderB]

break of SPX 2730 brings SPX 2600 handle into play

 

daily close below SPX 2730 is VERY BEARISH

 

not seeing panic selling, as yet

[dTraderB]

glancing at my SPX daily in the far corner..... 50ma only 6 points away from 200ma

 

death cross? inverted yield curve?

Edited by dTraderB, 04 December 2018 - 01:28 PM.

[dTraderB]

a DOW 1000 point decline?

 

I am very careful, hit & run, xtreme  scalping

[dTraderB]

SPX 2700/2690 thick strong support zone, will it hold