Here we go again, another slide into Disinflation. Keystone's indicator has dropped under 3.0 a couple times over the last month but the market bulls have been able to pull the indicator back up and out of Disinflation. Will tomorrow see another rescue or do the markets continue down the disinflationary and deflationary rabbit hole? We find out in less than 12 hours. Once the CRB drops under 300 Chairman Bernanke will start losing sleep.
Backing up, and taking a look at the numbers;
CRB/10-Year Price = 301.46/100.69 = 2.99
Over 4 = Inflation
Between 3 and 4 = Neutral; inflationists and deflationists fight it out
Between 2.9 and 3.0 = Disinflation
Under 2.90 = Deflation
The last time inflation existed, with the indicator over 4, was the top in the commodities bubble during the summer of 2008. Over the last year, the 3.5 to 3.6 area was tagged but it did not last, the inflation was transitory in nature just as Chairman Bernanke says it is, one of the few things that Keystone and Bernanke agree on. Deflation, readings under 2.9, occurred in early 2009 which necessitated QE1 and during summer 2010 when the markets were going over the falls and Bernanke stepped in with QE2.
Use the CRB 300 level as a signal that the economy is falling into Disinflation. The economy will be falling into Deflation once the CRB starts falling under 290. Bernanke will announce QE3 when the CRB prints in the range of 250 to 280-ish. Obviously, the Jobs Report will impact the indicator in the morning so check it tomorrow to see if the economy remains in Disinflation, or if the market bulls can wrestle it back into neutral territory.
What does not come out in the wash comes out in the rinse. I strongly suspect the long-term implications of QE this and QE that will be long suffering. Said reminds me of the constant tinkering Greenspan used to practice and I'm reminded of the binge like buying and selling back in the bubble days of the mid 90's.
ReplyDeleteWhat ticker symbol can I get the 10-year price = 100.69?
ReplyDeleteHello MCAP and Alex, yep, sure enough the QE has sold us all down the river, everyone is simply enjoying the punchbowl, until it all runs out. The effects are less and less so QE3 will not have much oomph and once markets realize that the juice does not help anymore, that will a turning point and trouble. If the country would have taken the pain, 2009 and into 2010 would have been extremely difficult but the American people are resilient and would have helped each other and would have weathered the storm. We would have a robust economy now, with jobs and a new attitude that the country is truly rebuilding. Instead we are left with a cancerous economy a la Japan's lost decade, now lost two decades; the U.S. now moves thru its fourth year of its first lost decade.
ReplyDeleteAlex, ten-year price is tricky to find since most sites simply want to post the yield and not the price. Google 'Bloomberg 10-year price' or on the Bloomberg site under 'Markets' click on 'Government Bonds' and you will see the 'US' 10 year. Remember any fractions are 32nds so if a price is say 100-22 that is 100 and 22/32, or 100.69. There are others places if you dig around but that should take care of you. Also, the cable news networks such as CNBC, watch the ticker tape scrolling on the tv since the 10-Year will pop up and you can jot the price down when you see it.
Thanks Keystone. I found it using the information you provided.
ReplyDeletehttp://www.bloomberg.com/markets/rates-bonds/government-bonds/us/
Why does this price = 100.69, but the ZN futures which is also 10-year = 132.xx?
That which you say is sad because life can have those times whereby a decade falls away.
ReplyDelete08:30:21 JUN12 Futures ES BOT 5 1383.00 GLOBEX 10.05
08:37:08 JUN12 Futures ES SLD 5 1386.00 GLOBEX 10.05
That was weak but my pimp hand was strong today.
ES Jun'12 @GLOBEX 1381.75 - 4.50 "really" !!! We are done your algo is probably going to flip today if this keeps up. P&F charts call CRB at 300 but Cooper is targeted higher hows is SOX going rally in the midst of this environment. I don't follow it enough yet to even have a proper opinion but I don't know what I don't know and when the 30min candle goes red on long lead up to Friday after the report it's time to walk and leave sleeping dogs lie as life lost to the screens all day and night isn't worth the cost.
ReplyDeleteOh KS please post your exit on ENOC so I can compare it with my box as per your algorithm program. Lastly I been bid and taking in some CEP in the last couple of days ahead of earnings just for giggles to see if it would run and if the positive divergences would pan out time will tell earning are next week Friday if I recall correctly. I look forward to building a business plan for next weeks markets all the best to all and thank you once again for all that you contribute to us here.
MCAP, Keystone will probably take profits on ENOC at the open, as long as it pans out. If not, the position will be added to over time. If profits are booked, then a reentry will occur either later today or next week since it has -constructive charts moving forward.
ReplyDeleteOn CEP, dialy chart is setting up with positive divergence but note that the MACD line will want to see another low in price, a juicy gap is at 2.05. On the weekly chart, slight positive divergence in January bounced price but the price action now is not positively diverged (since price first has to print a lower low to see if the divergence exists with the indicators). Keystone will likely place that on the Picks list but the 1.80-2.05 area may be the attractive entry area, that 2.05 gap may be a nice entry.
OoOooo CEP I just saw that now that you mentioned it I don't like gaps if I'm long above them. My eyes were blinded by hopium and it's too late to wait now for a better pricing structure. My system often get me in early but nevertheless after looking at it again more closely I saw previous resistance on 5 Jan 2012 around 2.15 which may prove to be support as per the breakout on 30 Jan 2012. Prices have likely just stopped at the proverbial “sign” if you will and yield lower as you say which is the problem with junk off the bottom it's junk. Prices are hard pressed on CEP to even exceed the 50MA on the 30min chart but in contrast to say to a“real” company like CHD for example prices simply just goes up on weakness and it’s hard to even acquire shares at the 20MA on the daily chart. I’m in a full rant right now so I’ll wrap it up in a effort to reprove myself just because I can catch a falling knife doesn’t mean I should and its really no way to run a business. Speaking of which look at those sPoOs drop who wants a piece that….
ReplyDeleteThanks KS
+ 09:44:56 Stock ENOC SLD 1,000 6.017 SMART 4.90
To "alexthered": Per Dow Jones Market Watch, 5-04-2012, 5:29 P.M.
ReplyDelete10 Year Treasury Bond closed at a yeild of 1.886%.
DJIA and S & P 500 were way down due to European
markets closing heavily in the RED (that's DOWN-DOWN-
DOWN) because of weak April U.S. employment data.
A "flight to quality" in the Treasury market drives prices UP,
and yields DOWN. 1.886% would have been unthinkable 45 days
ago (i.e. 3-13-2012 10 Year close: 2.102% (- 21/32 change).
This comment has been removed by the author.
ReplyDeletePlease note that the silver RAS has put a bottom in on both the 8 hour RAS and the Daily Silver RAS. WEekly has not not turned up yet. We either have a short term rally to bring the oversold up to neutral or we have bottomed. The weekly has not turned up yet to give conclusive evidence. More to come. My own personal opinion is that the silver RAS will bottom either Friday or Monday setting the stage for a multi week raly.
ReplyDeleteIn my next response I will provide an update on the S&P500 RAS (Relative Average Stochasric)....The difference between my stochastic and anything thing that exists is that it is bot h exponential and fractular at the same time. Better timing in both regards....a little early yes but only by a couple of days......I have worked on this since hte early 80's. Never shared it until now......Was toooo selfish with the profits that came my way
Scotty