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Thursday, June 16, 2011

Keystone's 2-10 Spread Indicator Loses 255

Keystone's 2-10 spread indicator helps gauge if the yield curve is advantageous or disadvantageous to the banksters.  Key uses a 255 value to separate financial bullishness from bearishness.  If the spread is above 255, banksters are happy, content and become happier the higher the spread goes, under 255, the financial bears are growling.

Financials are linked with techologies so you will see these two sectors move together a lot, weak financials=weak tech, and, visa versa. These two sectors provide leadership for the broader market so their behavior is important.

Many traders talking about a quickie long on financials, Keystone says there are other things to play.  Funny print/s today, perhaps some type of fat finger entry skewing the XLF charts, this does not increase your confidence.

Well, where is the spread at now?  At 3 PM EST, 10-year is 2.90; 2-year is 0.37; thus, 290-37=253 ; thus, failure.  No point to play the banksters, probably best to simply stay away from the financials as long as Keystone's spread is under 255.

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