ACE: View my IBD 50 charts!* TED SPREAD back to 2009 crisis levels! (9/26/16)
- 0.1a -aTreasury - EuroDollar Spread (EOD) ($TED)- Events chart
The TED SPREAD is used by financial analysts and market pros working for the big trading houses. It is a comparison between interest rates on US dollars in the US versus US dollars trading in Europe using the 3 month money market rates. In general, since the 2008 Financial Crisis, when the TEDDY is falling, this is favorable to European markets and possibly (though not always) unfavorable to US markets. Vice versa, when the TEDDY is rising, it can translate into troubles in the European markets (though not always). This is a weekly chart graphed with historical news events.
-0.1 a - b Deutsche Bank AG (DB)
UPDATE on 9/30/16: At www.AceStockTrader.com, we have been tracking the chart of DB for the last several months and have made money shorting the stock. Now, in recent days, the troubles at DB have made world headlines, especially the derivatives risks of the German bank.
In trying to find the center of the looming storm (the new financial crisis), it seems to me that Deutsche Bank may be one of the triggers for that storm. The chart shows the bank stock to be in continual decline. This is the 11th largest bank by assets in the world, and considered by many to be 'too big to fail.' One prominent market observer has commented that the derivatives book of DB is large and that recent selling in the stock could be the proverbial 'canary in the coal mine.' In other words, another Lehman moment may be approaching, and DB could be at the center of that storm? Of course, Germany and the EU will 'do whatever it takes' to rescue this bank, but nonetheless, it could trigger problems in the international swap system and possibly trigger a crisis? Another European bank also swirling in bearish sentiment is Credit Suisse. If you scroll down a little on this page, you will find the CS chart. (June 16, 2016)
-0.1 a - bS&P 500 SPDRs (SPY)-Quadruple Witch Follow-on Effects
So, is it safe to go long after a Quadruple Witch day event? Maybe not! This chart shows that 67% (8 of 12 over the last 3 years) of the Quad Witches led to more selling in the days immediately after a witch event. If one ignores the Quad Witches of December (when Santa Claus rallies occur), then selling occurs 80% of the time (8 out of 10 situations).
Note: SEPTEMBER QUAD WITCHES HAVE A PERFECT 100% TRACK RECORD FOR MARKET SELL OFFS! ...AND MOST SEPTEMBER QUAD WITCHES LEAD TO SHARP SELL OFFS IN PRICE.
-0.1 a - cGold - Continuous Contract (EOD)/Oil - Light Crude - Continuous Contract (EOD) ($GOLD:$W
UPDATE: July 10, 2016: The Gold-WTI Ratio is moving higher once again in the month of July and heading back toward record levels. Even now, the ratio remains well above previous high benchmarks which occurred during times of severe economic stress. It seems to this observer that the central banks are doing everything in their power to prop up the equity and high risk bond markets in order to create the illusion that all is right.
UPDATE: October 2015: The Gold-WTI Oil Ratio remains at historic highs. This barometer tells us that there is a great imbalance in the global economy. Gold being so strong vs. the price of oil tells us that the global economy is weak and that we should be on the lookout for economic stress.
Why compare Gold to the price of Oil? Both are priced in US dollars, and since many people believe the US currency is de-basing, we may not be seeing the REAL influence of gold to oil. By comparing the two directly, we eliminate the Dollar's influence to see what is really happening between these two prized commodities.
Also, gold is a store of value, and has only minor (but growing) usage by industrial markets. On the other hand, oil is a very important usage commodity...the world would basically grind to a halt without oil. When oil is thriving against gold, it can be said that the world economy is advancing.
-0.1 a - Crude Oil - Spot Price (EOD) ($WTIC) Daily
Daily chart for West Texas Intermediate Oil
UPDATE on 9/8/2016: WTI breaks out of a BULL FLAG. It might try to re-test the breakout point near $46.20 before it takes off much higher, so keep an eye on a possible 2nd entry point.
UPDATE on 7/30/16: WTI OIl Index reached the 200 day line support on Friday. The FAST RSIs graph on my chart (top graph on my chart and only found here!) shows a possible bounce is beginning. OIl may find a bounce here, but probably only back to the down-trend channel area before the major new down-trend resumes, imho!
UPDATE on 7/9/16:: The ACE Triple-X signal has indicated an EARLY SELL indication. This sell signal is not yet confirmed, but do notice that a new down-trend channel had developed with lower highs and lower lows. Since the equities markets seem to be in close correlation with the price of oil, this may be an indication that the stock market rally is close to an end?
UPDATE on 6/6/16: The WTI Oil Index continues to rally after coming out of the bull flag, as I predicted last month.
UPDATE on 4/10/16: Sharp reversal occurred this past week, and now the pattern becomes more clear as a Bullish Flag reversal. Breakout of the flag occurred on Friday, thus confirming the wedge line breakout of about two weeks ago. Next target is the firm resistance at the 200 day line ($41).
-0.1 a - cTreasury - EuroDollar Spread ($TED)-daily
UPDATE 9/26/16: The TEDDY is at a 7 year high and back to crisis levels last seen in April of 2009. Non-public money market instruments are no longer implicitly being backed by the US government, per new rules. Also, the worrisome position of Deutsche Bank (NYSE: DB) reserves on the heels of a large legal claim from the US is putting DB under distress. DB's large notional value of derivative instruments has many observers worried.
UPDATE 7/30/16: The TED Spread has spiked to a dangerous level at 0.57! This tells us that there is large imbalance somewhere in the credit/ financial system as it exists between Europe and the US. This spike follows the just released bank stress tests in Europe. This spike suggests that levered assets could be in for a downfall--use caution with long equity (stocks) and consider a move into US Treasuries and Gold for the time being. As always, consult a licensed financial advisor for advice-- I am not one, so this is only one person's opinion.
UPDATE 6/11/16: The TED SPREAD has gone back above 0.4 once again. This warns us that there is a financial imbalance growing between Europe and the US. With the Brexit vote less than 2 weeks away and the Frankfurt and Paris exchanges under great pressure, this is an index to be watched closely in the coming days.
The TED SPREAD ($TED) -- sometimes affectionately called 'the TEDDIE'-- tracks the yield spread between the historically 'safe' 3 month US Treasury Note interest rate and the 3 month LIBOR Rate, which is the European base lending rate for banks around the world. Generally, when the spread is low, stock markets tend to perform well. In 2008, the Teddie rose dramatically which foretold of a significant and damaging credit event which eventually came to pass and led to a generational low in stocks in early 2009.
In mid-2012, we saw here that the TEDDY was falling dramatically, which led to the general call to get bullish in stocks. Since then, we have seen the US stocks (and other global stock markets) rally consi
-0.1 a ETF Top 5 Index (!SPWTOP5)
Thanks to CARL SWENDLIN, a top technical analyst and blogger at www.StockCharts.com for coming up with this idea of measuring the price momentum of the top 5 ETFs.
-0.1 aa $SPX - The Big Picture Chart
UPDATE: July 9, 2016. Yesterday, the SPX broke through a short term resistance line as well as the year long neckline of the Inverse H&S that I have remarked on before.Normally, this would be an 'all-in' signal to load up on stocks. HOWEVER, I am actually making a contrary call here. This looks to be a head-fake top. Have you ever wanted to know when to sell at the top? This may be it. Here are the market resistance points: As noted with my $WTIC oil chart, it appears that a strong SELLING trend is setting up in the oil market. OIl and Stocks have had a strong trading correlation this year. Second, the benchmark US Treasury yield reached a new all-time low yesterday--bearish! Third, the price of gold is holding near a two year high- bearish. Fourth: European banks like CS, DB and Italian banks are under distress, as noted on my charts list. Reason #5: China has quietly been de-valuating the Yuan in recent days which signals an exodus of capital from the world's best large growth economy.
UPDATE; May 24, 2016. Once again, totally unnoticed by the popular pundits is that the 400 day line was tested and held once more. On the SPX chart, the 400 day line has been drifting near the 2040 mark. Each time, the 2040 line has proved to be supportive to the SPX when tested in 2016. The Bull Market remains alive for now. However, do note that the 400 day line has flattened out and is no longer rising. That is a sign of a tired bull market, imho.
I thank you for your votes and support. On this board, WE are here to make profits in the stock market--pure and simple! By the way, I am an Associate Member of the Market Technicians Association (MTA). -Mike
-0.1 aa -United States Oil Fund, LP (USO)
UPDATE on 7/29/16: I just concluded a quite successful short trade on USO as the WTI OIl chart reaches my intermediate target at the 200 day line. Will wait for the bounce to play on out on oil, before looking to short USO again. Mike
-0.1 aa US Dollar Index - Cash Settle (EOD) ($USD)
Update on July 30, 2016: A sudden down-turn in the $. Is the FED trying to prevent another China Yuan devaluation? or has the FED re-opened swap lines for failing European banks following some poor results in the Bank stress tests?
Update: Major dollar reversal on Friday, June 4th following a very weak US Jobs Report. Notice that the chart predicted a possible pullback as the index reached the late January down-trend line, a key resistance point on the chart.
Update on May 24, 2016: The dollar rally has been strong the last few weeks. Notice it broke free of the deep downtrend channel in mid-May and then pushed through the influential 50 day line.
Update on April 30, 2016: US $ is in free-fall, as noted in the previous two weeks, the 13 EMA line was guiding down in advance of this move.
Update on February 5, 2016: The US dollar index has collapsed in the past week, breaking down through the 50 and 200 day lines very quickly!