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It has got to be the belief that the long term economic outlook is looking good. This may be a sign that we're finally over bought and should start protecting our euphoric position.
 
Thanks. I looked at some long-term charts of the dollar vs. the price of the 10-year Treasury, and while there were many times that they moved in opposite directions (yields and dollar moved in same direction), there were also periods where they moved together (yields and the dollar moved counter) as we're seeing now.
 
The Volatility Index has pulled back to the 200-day MA. Was that all the volatility that we'll get, as we've seen in the past, or will the moving average hold here?

012218a.gif
 
Dalio has interesting dual message. He says you'll feel stupid if you're holding cash in this environment - UNLESS the Fed gets aggressive. Coincidentally that's what I talked about in today's market commentary...

https://www.cnbc.com/2018/01/23/ray...g-cash-youre-going-to-feel-pretty-stupid.html

Dalio explained that the Federal Reserve's potential rate hikes are the key risk for the market. He said if the central bank increased interest rates by 100 to 125 basis points, asset prices will drop.

"You can't have a significant rise in interest rates without knocking over the whole asset markets," he said. The "Fed is going to determine what the level of real interest rates are."
Click to expand...


http://www.tsptalk.com/mb/blogs/tsptalk/4297-what-shutdown.html

What could derail this market? It will probably be something unexpected, so obviously it would be tough to prepare for. There is an FOMC meeting next week and with the economy showing definite signs of growth, I suppose they could raise rates 0.50% instead of the anticipated 0.25% and that could throw a wrench into things, but their more recent history has been to be as accommodating as possible to the markets, even when they are raising rates.
Click to expand...
 
Looks like it held as a ceiling at the beginning of the year, but other than that it gets sliced through pretty often.

tsptalk said:
The Volatility Index has pulled back to the 200-day MA. Was that all the volatility that we'll get, as we've seen in the past, or will the moving average hold here?

012218a.gif
Click to expand...
 
Two interesting things today, besides the negative reversal so far in stocks...

The dollar (sorry, repost from another thread) gapped down yet again...

012418a.gif



And copper tanked this morning - not something we might expect with the dollar down so much. So, this is an unusual setup.

012418b.gif
 
tsptalk said:
Two interesting things today, besides the negative reversal so far in stocks...

The dollar (sorry, repost from another thread) gapped down yet again...

And copper tanked this morning - not something we might expect with the dollar down so much. So, this is an unusual setup.
Click to expand...

I see the problem. That chart of copper in the prior post was not updated for today yet. Copper actually rallied almost 4% today with the dollar dropping. That makes more sense. Sorry for any confusion.
 
bmneveu said:
What does the market do the day/week after the Dow drops 500+ in one day? (on average, it goes up)
Click to expand...

One thing may be different this time... 500-points now is a lot different than 500-points going back 25 years. I wish they would have listed the 17 times because going back 20 years (let's say 1997) the Dow was in the 7000's and 500 points was obviously much more significant.
 
It would have been a more even playing field to pull the stats for when the Dow was down 2.5% in a day instead of 500+ points. Agree.

tsptalk said:
One thing may be different this time... 500-points now is a lot different than 500-points going back 25 years. I wish they would have listed the 17 times because going back 20 years (let's say 1997) the Dow was in the 7000's and 500 points was obviously much more significant.
Click to expand...
 
The yield curve has been flattening gradually, but still isn't truly "flat", much less inverted, yet. That's usually a pretty good indicator of whether we're heading for a recession or not.
https://www.bondsupermart.com/main/market-info/yield-curves-chart
My own read is that today's drop was one of those good-news-is-bad-news odd things that the market does sometimes in reaction to positive economic data (and its subsequent impact on interest rates). I'm fully expecting the Dow to be up 200-300 points on Monday morning, as it'll be seen as a buying opportunity. If we're flat or even a little negative again over the coming week, I'll be more alarmed, b/c that could mean we're off into "here be dragons" territory.
 
i think it'll bottom out on monday and start its uptrend late monday/early tuesday. everyone over the weekend is freaking out so that'll transfer to early monday morning - so i think tuesday will be the real indicator as to whether or not we'll be in the doldrums or not
 
We know what's happening to stocks, but it's interesting that the credit market hit and held at the 200-day EMA... so far.

020518a.gif
 
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