• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Stock Long Bonds: Island Bottom and the Signal of Chaos
Stock

Long Bonds: Island Bottom and the Signal of Chaos

by March 11, 2023
by March 11, 2023 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

On March 7th, we asked “Will the Market Internals Turn More Bearish”?

While we focused mainly on Jerome Powell’s testimony, when he said “if the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes,” in the same Daily, we featured the long bonds (TLT) and that the chart had a constructive exhaustion gap bottom in play. We went on to write that “the Real Motion indicator shows a positive divergence, as momentum is just under the 50-DMA while price is considerably below its 50-DMA.”

The question asked was, why would the long bonds bottom? Our answer:

“It could mean that while the short-term yields invert, the market is expecting a recession, hence a flight to safety in long bonds. We imagine that, should 20+ year bonds continue to go north, that too could be inflationary.”

We started the year introducing our report, “How to Grow Your Wealth in 2023.” In this Year of the Yin Water Rabbit, we began with:

You Can’t Run with the Hare and Hunt with the Hounds.

Little did we know then, how well this describes the Federal Reserve, the reversal in TLTs and the catalyst of 2023’s biggest dilemma of all — Recession or Stagflation: What Will It Be?

More from the Report: “For 2023 one word and two expressions keep coming up: Chaos, Trying to fit a square peg into a round hole, and Looking for Inflation in All the Wrong Places.”

Of course, the biggest headline this week in finance is the collapse of SVB and Silvergate. That sounds a lot like Chaos. The full fallout is unknown, but if the market has anything to say about it, both long bonds and gold rallied.

Folks calling for deflation are using Money Supply decline as an example. They are citing “higher for longer” concerning rates. They are talking about the strong labor market.

BUT… that is more of Trying to fit a square peg into a round hole.

Five Reasons Folks are Looking for Inflation in All the Wrong Places:

Climate-Natural DisastersFood shortages could prevail-hoarding-sugar prices flyingSocial unrest from high inflation, higher yields, losing credibility (banks, government) CLASSIC example this week.Geopolitics-rising tides of issues-we hope not but be prepared.Government spending/Federal Reserve-what are they going to do now? Print? Save the banks? Keep raising rates creating more liquidity crises?

The chart of the TLTs show price clearing the 50-DMA. That is an unconfirmed phase change to Recuperation. A second consecutive close above will confirm the phase change. Clearly the Leadership indicator tells a story, as bonds well outperform the SPY. And the Real Motion of momentum indicator, already with a positive diversion as mentioned on March 7th, now could stay in gear.

Could the picture reverse next week? Yes. However, to quote the Report: “The lesson we should take from this is not that inflation is destined to move to new highs in the months ahead (after all, nearly 30% of the time, it is, in fact, cresting!), but that we dismiss that possibility at our peril.”

Our Global Macro Quant Model bought gold. Even the algos know what’s up!

For more detailed trading information about our blended models, tools and trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.

IT’S NOT TOO LATE! Click here if you’d like a complimentary copy of Mish’s 2023 Market Outlook E-Book in your inbox.

“I grew my money tree and so can you!” – Mish Schneider

Get your copy of Plant Your Money Tree: A Guide to Growing Your Wealth and a special bonus here.

Follow Mish on Twitter @marketminute for stock picks and more. Follow Mish on Instagram (mishschneider) for daily morning videos. To see updated media clips, click here.

Mish in the Media

Mish joined the March 10 closing bell coverage on Yahoo! Finance, which you can see at this link!

Mish goes through the macro through key sectors and commodities in this appearance on CMC Markets.

Mish joins Mary Ellen McGonagle (of MEM Investment Research) and Erin Swenlin (of DecisionPoint.com) on the March 2023 edition of StockCharts TV’s The Pitch.

Mish talks women in finance for International Women’s Day on Business First AM.

Mish focuses on defense stocks in this appearance on CNBC Asia.

Mish points out a Biotech stock and a Transportation stock to watch if the market settles on Business First AM.

Mish joins Maggie Lake on Real Vision to talk commodities and setups!

Read about Mish’s article about the implications of elevated sugar prices in this article from Kitco!

While the indices remain range bound, Mish shows you several emerging trends on the Wednesday, March 1 edition of StockCharts TV’s Your Daily Five!

Mish joins Business First AM for Stock Picking Time in this video!

See Mish sit down with Amber Kanwar of BNN Bloomberg to discuss the current market conditions and some picks.

Click here to watch Mish and StockCharts.com’s David Keller join Jared Blikre as they discuss trading, advice to new investors, crypto, and AI on Yahoo Finance.

In her latest video for CMC Markets, MarketGauge’s Mish Schneider shares insights on the gold, the S&P 500 and natural gas and what traders can expect as the markets remain mixed.

Coming Up:

March 13th: Mish on TD Ameritrade with Nicole Petallides

March 14th: F.A.C.E. Forex Analytix with Dale Pinkert

March 16th: The Final Bar with Dave Keller, StockCharts TV

And down on the road

March 20th: Madam Trader Podcast with Ashley Kyle Miller

March 22nd: The RoShowPod with Rosanna Prestia

March 24th: Opening Bell with BNN Bloomberg

March 30th: Your Daily Five, StockCharts TV

March 31st: Festival of Learning Real Vision “Portfolio Doctor”

April 24-26: Mish at The Money Show in Las Vegas

ETF Summary

S&P 500 (SPY): Our trading range theory was 4200-3200–maybe.Russell 2000 (IWM): 170 next major support, 182 resistance.Dow (DIA): 310 support, 324 resistance.Nasdaq (QQQ): Unconfirmed bearish phase–confirms if second close under 290.Regional Banks (KRE): Maybe overdone for now, but not necessarily done. 40 target, 55 resistance.Semiconductors (SMH): Still in a bullish phase, over 240–maybe a pop for everything.Transportation (IYT): 223 the 200-DMA major support–2nd in strength to SMH.Biotechnology (IBB): Teetering on the 80-month MA at 121.Retail (XRT): Under 64 remains weak–next big support at 56.00.

Mish Schneider

MarketGauge.com

Director of Trading Research and Education

You Might Also Like
  • Will the Fed Make Gold Shine?
  • Hedging the S&P All-Time Highs With Options
  • Smart Money Alert: The Inside Scoop on Where it’s Going
  • GNG TV: Finding Outperformance in Choppy Markets
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Building Brand Names: 5 IoT Startups to Look Out for in 2023
next post
GOP rep unveils bill to install weapons lockers so House employees can take guns to work in ‘crime-ridden DC’

You may also like

GNG TV: CRUZ-ing into Summer!

July 7, 2023

Rate-Sensitive and Big Tech Names Strengthen as Market Breadth Gets...

May 15, 2023

2024 is Shaping Up Like 2021, Which Did Not End...

November 22, 2024

Using Nasdaq 100 Specific Breadth to Measure Risk Appetite

July 15, 2024

Four Prerequisites to Improve Your Odds – A Live Example

November 22, 2024

How To Confidently Trade the 2023 Stock Market

March 24, 2023

Trend Channels Help Define Stock Pullback Scenarios

December 6, 2023

Flying Financials. Will It Be Enough?

July 26, 2024

Yields Soar on Strong Jobs Report

October 6, 2023

The SCTR Report: Why PLTR Stock Remains a Top Contender...

April 30, 2025

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Krispy Kreme stock plunges after doughnut chain pauses McDonald’s rollout, pulls outlook

      May 8, 2025
    • Don’t Buy Robinhood Stock… Until You See This Chart Setup

      May 8, 2025
    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025
    • The Unpredictable Stock Market: How to Make Sense of It

      May 8, 2025
    • AMD CEO calls China a ‘large opportunity’ and warns against strict U.S. chip controls

      May 7, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,630 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,339 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,320 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,302 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,186 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,066)
    • Investing (538)
    • Stock (2,530)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Krispy Kreme stock plunges after doughnut chain pauses McDonald’s rollout,...

      May 8, 2025
    • Don’t Buy Robinhood Stock… Until You See This Chart Setup

      May 8, 2025
    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,066)
    • Investing (538)
    • Stock (2,530)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    DP Trading Room: Intermediate-Term View of...

    April 29, 2024

    Is Inflation Permanently “Dissed”?

    July 14, 2023

    MEM TV: Get In EARLY! These...

    March 22, 2024
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here