I think you would have to concede – that by every measure (Stocks, Bonds, Volatility), the US Federal Reserve has accomplished its goal to inflate asset prices – just look at this score:
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 | 3 |
| SPX | S&P 500 INDEX | 3 | 3 |
| RUT | RUSSELL 2000 INDEX | 3 | 3 |
| NDX | NASDAQ-100 INDEX INDEX | 3 | 3 |
| 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 | 1 | 3 |
| /CL[Q6] | Light Sweet Crude Oil Futures,ETH | -3 | -2 |
| /DX[U6] | US Dollar Index Futures | 1 | 3 |
| $DJT | Dow Jones Transportation Average | 3 | 2 |
| XLK | SELECT SECTOR SPDR TRUST TECHNOLOGY SELECT INDEX | 3 | 3 |
| XLI | SELECT SECTOR SPDR TRUST INDUSTRIAL SELECT INDEX | 3 | 3 |
| XLY | SELECT SECTOR SPDR TRUST CONSUMER DIS SELECT INDEX | 3 | 3 |
| XLB | SELECT SECTOR SPDR TRUST MATERIALS SELECT SEC INDEX | 3 | 3 |
| XLE | SELECT SECTOR SPDR TRUST ENERGY SELECT INDEX | 3 | 3 |
| XLP | SELECT SECTOR SPDR TRUST CONSUMER STAPLES INDEX | 3 | 3 |
| XLV | SELECT SECTOR SPDR TRUST HEALTH CARE SELECT INDEX | 3 | 3 |
| 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.
With that said – the obvious question is, what will they do next? Do they keep inflating the bubble – or do they try to start heading for the exit? There seem to be conflicting views:
- CNBC – Fed’s Harker now sees just up to 2 rate hikes this year
- Bloomberg – Bond Traders See Helicopters Loaded With Money
Strangest market I have ever traded.
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