Credit Flow Investor

The 2y treasury is a bit more sensitive and starts down sooner. But both confirm now…

Note record margin debts. Real SP500 levels bottom between 1000-1200…

Inversion That Matters

Inversion that matters…crossed 0 in April. This time 10-2y won’t happen as 2y treasury is falling faster than bonds.  Hence, there’s a much bigger run to cash than before which implies liquidity crunches. Once it reaches -1.0 …liquidity crunches for sure.

When fed drops rates….recession is around the corner:

1. 2000 rate drop Jan…recession start 2 months later.
2. 2007 rate drop Aug…recession start 5 months later.

See monthly below for 10 years…

And vix lines have crossed…base vix now 15

and TLT:oil has pulled back…

but oil and spy have some room to upside in early July…

and spy:

and oil falls the most in a long time as USD moves up:

Russell index is a good leading indicator for SPY. And is a non-confirmation of a bull market.

TLT is a buy 4th week of May or Jun 3…

Oil momentum still high…

Oil will slow down in May as it has been OB for most of April.

OB oil slows down economy for next quarter….

TLT is in a bull market > 40wkma…

For now TLT momentum has leveled but it goes chop/chop for 2 months then rises.

Hence, June move.

And SPY macd and momentum needs to come down in May as well (see May 2016).

The 2 year rates (now 2.33) have been falling since Nov 8 (2.94) showing a slowing growth and inflation.

Fed fund rates are now higher than the 2 year rates for first time in 10 years.

And the monthly difference below (now -0.08):

VIX needs to bottom in 2 months…rise in 3 mo

AND TLT:OIL Risk ON … needs to go sideways