I have seen this all before. The FED and gov’t have been benefiting from WS for years ..the ‘virtuous’ cycle. Oil and gas have remained low and everyone has been benefiting.

Quick summary:

1. SPY loses momentum (YoY)
2. Oil and Gas become speculations (the first signal of pre-recession)
3. Economy weakens
4. Bonds start to move (primary tracker)

BEFORE a recession, Oil and SPY become speculations that cease to ‘help’ the economy. SPY has a hiccup and then retraces plus 1%. SPY becomes a ‘pump and dump’ operation. That’s why the recession is not seen as every hiccup is followed by it going higher. BUT it is also true that SPY starts losing momentum before a recession; for example YoY starts to slow considerably which also signals the oil and gas market.

So when the recession arrives, very few are prepared and poo poo it. However, the bond market is more sane and starts to move up reflecting the real economy and coming recession.

SPY and Oil go through ‘surges’ so they lose their ‘steadiness’ while bonds become more smooth and steady. That’s why you can see all going up at the same time but there is only one true winner. In the mini-cycles before the big crunch, SPY and Oil crack in a deflationary phase and TLT pushes up quickly.

SO tracking becomes focused on bonds not spy or oil.

The ‘system’ works but after each recession it rebounds slower and slower.