Riddle Me This

The Twitter World of Finance has been hot on the yield curve topic. I've noticed more posts and conversations spurring up over the past two weeks. I did some digging around and collaborative work. The 2year10year vs the SPX relationship has been a precursor to equity weakness in the past. A level of .15 appears to be the tipping point. Let's see if this comes to fruition; as you know if you've read other posts; I see equity weakness as well. The more pieces of the puzzle that come together; the higher the conviction level on trades that can be taken and position sizing. In my opinion.

The Good Ol' Russell 2000

It all makes sense as the story continues to develop and unfold. The charts have been screaming divergences for the past year and a half as stocks rose. Coincidentally? the entire move up as been price driven and not earnings; i.e. multiple expansion. No not coincidentally; fundamentals and technical work in harmony; supply and demand in an auction market. Lesson to be learned I suppose is for one to recognize when this disconnect begins to occur and let the greater fool take price higher; you being the one knowing the whole time that this time would come when fundamentals may begin to matter again.

Stay tuned to see the facts and data as this unfolds and we find the fair value.

Reminder

108.66 - April Low.

The Good Ol' Russell 2000

Reminder

The Russell's P/E one year ago was 30 and price was 99(IWM); Today it's 100 and price is 125.

Price grew 20% while the P/E ratio ballooned 70%!. 

Are earnings going to grow fast enough to catch up to that price to bring back some kind of fair value?!?!

There is a small gap up at 113-113.50; so any counter trend bounce, look for that target.

For now; a daily close below the 200DMA makes the next few days very crucial for next direction.  Given the above statements; I'm not scratching my head on the why of this move lower.

Battle continues tomorrow.

Monitoring Developments

Re-posting this chart from early April. The update; nothing has changed and 23.07 has held for over a month and two separate probes of the level.

The next two charts show the importance of gaps and their attractiveness.

Bonus Chart: Shooting the gap.

For Your Review

Nasdaq correction in progress. Or Bubble popping? Stay Tuned

Interesting things happening here that will lead to the next major move.  Three dilemmas I'm watching; A rising channel that is broken and we are back testing; a head and shoulders top that could be to obvious to be the right pattern, a fake break out from the channel and the next move takes us straight vertical to the top side of the channel shown above.  With the moving averages tightening and converging around this 88 level and the 50 day moving average rolling over like a dome as well; there is a bit of coil here that will set up a nice move.

Monitoring Developments

Comments on the chart. Keep in mind; Indian elections are ongoing and end May 12th and that will play a huge factor in the supply and demand story.

Nasdaq correction in progress. Or Bubble popping? Stay Tuned

Well; that gap filled and held through FOMC and back to back large POMO days. Let's see how things play out with Non Farm Payroll Friday with NO POMO and in May. It's my view that the Nasdaq will be dragged down by all the crap MOMO names (LNKD, CRM, P, FB, TWTR, GRPN, ZNGA, NFLX, AMZN, and so on when investors realize they are holding stocks with no earnings and no return on equity.)

For now; here's the latest chart; will update more over the weekend.