📍 This chart update comes from the 'Alpha Protocol - Seeking Immediate Extraction'
The cramped inversion should aways be considered the end game of an economic cycle. But of course we will get the v shapers and naysayers who obliges that stonks only go up. The space available to operate against the Robinhood army is becoming more flexible. Sharp speculators are seeing more of an advance in the 2's 5's curve and abandoning ship when it suits them.
The threat of recession completely materialised and shows the importance of outguessing its weakness. You can learn from this inversion that:
1️⃣ Every other time this happened it ended badly for the global economy via recession. ✅
2️⃣ A Fed that lags and finances the Whitehouse will only add fuel to the flames... "it's different this time". ✅
3️⃣ The longer the delay in USD devaluation from Fed, the worst the blow is going to be in Equity markets. Assuming USD does not devalue materially into 2020 its repo will grow and continue expanding the balance sheet , one way or another eventually this is going to look like Fed has been financing the WhiteHouse and then the game is up. [in play]
Powell's noble attempt to pick a fight with the end game in an economic cycle can be regarded as having come to nothing. The threat comes from confidence and credit. Aiming for a complete annihilation across risk assets into 2021, the presence of the inversion was sufficient. Now this move will be made with momentum.
Interesting to know that it happened before COVID19 - Sept 2019.
It means that the US is slated for recession nevertheless.
With COVID, most likely the recession is going to be more severe and longer lasting.
Thanks for sharing.
Rickiest_Rick
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@i_am_siew, Come on now you know they never waste a good tragedy this was planned to keep ppl stupid while we crash...
Hermes4TW
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@Rickiest_Rick, What keeps ppl stupid is lack of info, disinfo, misinfo in regards to the virus and capital markets! There is more propaganda coming from this U.S. Admin about this virus, than authoritarian countries (who que in on the U.S. decisions), which has effected this economy more than the virus itself. Lack of a cohesive national pandemic plan has delayed econ recovery giving volatility to the capital markets. The tech indicators in the above chart have over-reliance on monetary policy than fiscal policy, except for the Fin Crisis recovery. This pandemic induced crisis is different and expect a W shape recovery. It should be expected as the 2nd wave of the virus is imminently at the precipice with a lack of POTUS preparation and organization because of political decisions over a scientific battle plan to contain it. Lack of confidence in the dysfunctional leadership, a sputtering econ dragged by poor leadership decisions to contain the virus nationally, and politics over the 2nd stimulus package is the tragedy. These issues will have to be solved in the near term to prevent another Black October 1987 heading toward this election.
ThumbSkin
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@i_am_siew, not gunna see a recession for another decade sorry
z3m25
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This post is VERY much appreciated.
Dr-H
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BTW, the dip of SPX on 1989 only retraced to weekly 200 (which we already did) and rebounced healthily.
crypto_winger
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The rug is pulled when folks least expect it. And it seems retail is convinced to BTFD. So it's time for big players to unload whatever they have. I speculate there will be a run-up higher in the short term due to stimulus talk and quarterly results. We start the run lower sometime in December and then it's GAME OVER. Thanks for sharing, really appreciate your work.
hahashishi
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@pvr17, 100%. the influx of retail investment is just more fuel on the fire. Here in New Zealand retail investors have broken all sorts of records in the stock market. I hear it is similar elsewhere. The Whales will be rubbing their hands together. Most predictions have gone out the window. But I think they just spoke too soon and the inevitable is being delayed.
Boatsnhoes
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Again, those who lost big with puts back in April are still hoping they can make it back and support it with ludicrous "analysis" like these. Stop revenge trading and ride the trend.
It means that the US is slated for recession nevertheless.
With COVID, most likely the recession is going to be more severe and longer lasting.
Thanks for sharing.