Stocks Stairsteps
Tim Knight | Oct 09, 2018 09:02AM ET
The tone of the market certainly seems to have changed recently. The VIX managed to traverse from about 11 to nearly 17 within a matter of days, and some sectors, particularly in technology, are finally beginning to take on some meaningful damage. One glance at the intraday NQ tells the tale.
This entire year, I’ve spent more time fretting over bonds than I have over the likes of the ES and NQ. The bonds, represented below by the ZB chart, are at a very interesting point. First of all, they have absolutely perfectly made the measured move that I hypothetically charted out several weeks ago for my Gold and Diamond members. The height of the topping pattern almost precisely equals the depth of the down-move thus far.
It’s the “thus far” that I’m worried about. Do we commence a strong rally at this point in bonds, reliving interest rate pressure on equities and giving the bulls a brief break? Or are bonds in such dire straits that they simply keep crashing lower from here?
Even a Diamond membership can’t answer that question. The chartist in me is inclined to believe that bonds are “due” for a relief rally, perhaps to a little higher than 139. Long-term, I’m barely concerned, as I think bonds are destined by much substantially lower than they are now.
To maintain what’s left of my sanity, I continue to do what I’ve always done: focus on a large quantity of small, carefully-chosen positions whose stops are the decision point for each and every one. That way I don’t really need to embrace a specific short-term direction and instead let the components of the body take care of the body as a whole.
On a separate note, I want you to know we’ve got a pretty cool feature upgrade to announce in SlopeCharts, so I’ll be doing a post about that once the market closes today.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.