Markets, February 2017 (update)

Posted: February 22, 2017 in Uncategorized

Since December my systems told me that this markets had a destination around SP500 2,380 -2,420 – with a potential blow off phase till circa 2,500.

Sincerely even I was not believing them myself – but they look true to form.

At the same time the risks, as it is seen by Institutional investors are continuously rising – so much so that institutional are constantly in and out of the market since the 9th January.

Ho we quantify risk?

A few ways (and mind you they all point in the same direction)

Treasury Bond yield 10 year 9zero risk) shot up 50% since July 2016

TED spread (future contract, 3 months, US T bond (zero risk) versus eurodollar 3 month). It is up 70% since 2013 (2003 -2007 went up 76% before the crash).

Vix is around 11 (very low/bullish) since January. Only before the GFC stayed so low for so long. At the same time the SKEW (probability of a black swan crash event) is 136.93 (this is a recent indicator with clean data since 11. The maximum level reached is 154 at Brexit).

Gold is up 18% sine mid December

Investors Intelligence Advisors’ Sentiment Survey went up to 61.8 (only better in 2007 pre crash and in July 2014 (and in October we had the biggest crash since 2009 due to Ebola/Europe crisis).

Currency, with a lower US dollar, again does not match the stock market pattern.

So all of this tell you that the institutional investor are seeing great risks in this rally.

For all these risks the market trend  is still in uptrend and could continue being like this for still a few months (or not).

Some other technical indicators say that now the market can have an uptrend maximum of 10% and a downtrend max of 45%.


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