Indexes Begin Topping Again, Bonds Rally, Yield Curve Inverts, Uh Oh

Weekend March  16 2019

 

The reliable NYSE A/D line has now double topped as it did last September. None of the MAs have been penetrated though.

Daily NYSE A/D

On the daily  chart RSI and MACD have rolled over forecasting more downside..  Carl Swenlin remarked that at re test of the December low was a bit much to expect next, gee why Carl, especially given

 

five waves up in various fractal time frames

no rally has lasted more than ten years, and that time frame was up a week ago.

It may be 2018     4  sell off was a preview of things to come.

 

Breadth peaked n February, the MAs have converged and now headed down.

Weekly

Russell 2000 is a leader in predicting what will happen

 

RUT blipped over the 61.8% level and is now set up for what may well be a re test of the December low.

And now the bad news

This is chart of the difference in the ten year Treasury Yield and the  3 month bill yield.  As you can see it has inverted, the ten year now yields less than the 3 month bill.

Translation, investors are so fearful they are willing to take less than the three month yield in a flight to safety and quality.

John Murphy note that every time this has happened since 1975 a recession follows months later.

 

I suspect that is the message as well for the  2018 4 Q 4,000 pont DJIA collapse.  As noted above the Transports and Russell failed aat their  200 day

MAs.  Sure the tech sector has been hot but that takes your eye off the big picture.

Transports Year  2000 Collapse

 

Not the tun up to a parabolic high in  1999 for the Transports. Then the Trannies started a  long slow stair step down which finally ended in  2003.

I suspect the same thing is happening now.

Today

 

Today we have a similar biog run up, and then collapse and re bound. Now the rebound fails at the moving averages which are staring to bend over. It will take several weeks but the next shoe to drop is the MAs converging before turning the new trend down.

Eneergy Service

 

I have warned about the weakness in the Energy Service XES for months.  On friday it and HAL and SLB all  declined 5%, a huge drop in one day.