Every time the equity markets have tried to roll over this spring – the World’s Central Banks have acted – to the point we now have negative interest bond yields across the globe.
- MarketWatch – Have central banks lost their magic powers?
Well – after trying to reach new all-time highs last week and failing – the equity markets are rolling over again – what will be the response?
Let’s look at this week’s trends:
The following table is based on the Z Option Market Analysis Tool – which determines if a market is trending by assigning a trending score from -3 to +3. This helps us keep our trading with the trend.
| Symbol | Description | Short Term Trend | Medium Term Trend |
| $DJI | Dow Jones Industrial Average | -3 | -2 |
| SPX | S&P 500 INDEX | -3 | 1 |
| RUT | RUSSELL 2000 INDEX | -2 | 1 |
| NDX | NASDAQ-100 INDEX INDEX | -3 | -2 |
| VIX | CBOE MARKET VOLATILITY INDEX | 3 | 3 |
| /ZB[U6] | 30-Year U.S. Treasury Bond Futures,ETH | 3 | 3 |
| /ZN[U6] | 10-Year U.S. Treasury Note Futures,ETH | 3 | 3 |
| /GC[Q6] | Gold Futures, ETH | 3 | 3 |
| /CL[N6] | Light Sweet Crude Oil Futures,ETH | -3 | 1 |
| /DX[U6] | US Dollar Index Futures | 2 | -1 |
| $DJT | Dow Jones Transportation Average | -3 | -3 |
| XLK | SELECT SECTOR SPDR TRUST TECHNOLOGY SELECT INDEX | -2 | 1 |
| XLI | SELECT SECTOR SPDR TRUST INDUSTRIAL SELECT INDEX | -2 | 1 |
| XLY | SELECT SECTOR SPDR TRUST CONSUMER DIS SELECT INDEX | -3 | -2 |
| XLB | SELECT SECTOR SPDR TRUST MATERIALS SELECT SEC INDEX | -2 | 1 |
| XLE | SELECT SECTOR SPDR TRUST ENERGY SELECT INDEX | -2 | 1 |
| XLP | SELECT SECTOR SPDR TRUST CONSUMER STAPLES INDEX | 3 | 3 |
| XLV | SELECT SECTOR SPDR TRUST HEALTH CARE SELECT INDEX | -2 | 1 |
| XLU | SELECT SECTOR SPDR TRUST UTILITIES SELECT INDEX | 3 | 3 |
| XLF | SELECT SECTOR SPDR TRUST FINANCIAL SELECT SECTOR FUND | -3 | -2 |
Any market showing a 3 or a -3 is trending strongly – and should be factored into any options strategy you are contemplating.
The Fear trade is working – bonds and gold up, stocks down – in the short term anyway. Markets still are not that far off the all-time highs – so I would not get excited yet.
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