The Mars Market Update — Live Research

The dichotomy between real world macro trends and bullish asset markets continues. While global asset markets rally to new ATH's and volatility has been suppressed to multi year lows, financial stress indicators are starting to increase. What happens if rates rise around the world? Key observations and risks: The TED spread and Libor rates have been steadily rising indicating financial stress Bonds and Equities are highly correlated at +1 (no diversification) Suppressed volatility eventually...

The markets haven't really made much progress since last week's update and "hopefully" the Northern Hemisphere summer malaise is coming to an end? These range bound markets have shown no follow-through to date but I'm encouraged by the compressing nature of some markets that appear to be setting up break-out moves (specifically TLT and USDCHF). To the equity markets and the SPX/ES continued their shallow corrective declines. Interestingly, higher beta indices and the banks have continued...

Last week's update was focused on a stronger US$, topping equities, whipsawing bonds and caution regarding PM's - so far so good. This week we find out if there is any follow through to Dick Fischer's crazy antics. The US$ rallied and the bond yields spiked higher and while we saw a number of key outside day reversals, it has been my experience that reversals on "news" need follow-through confirmation so that the price moves gain momentum. Fed whipsaws are the norm in this market and...

Equity markets pulled back last week after Monday's new ATH's. There are enough waves in place to complete the impulsive rally since the June lows. While there are no clear signs of a reversal as yet, the recent trend is either exhausted or exhausting. Risk is to the downside. The US$ found support at my 94.00 downside target (actual low 94.05) and has reversed higher (only in 3 waves so far). The US$ rally needs to extend into 5 waves up followed by a 3 wave correction to provide a change in...

Bonds and the US$ are my primary focus for now as last week provided important near term clues for the bigger picture trades. My next big play is Short Treasuries and Long US$ but patience is required near term (see below). Stay tuned to my mid-week tweets as I update the important structures... Global equity markets continue to rally as expected and the DJIA has finally made a new ATH to confirm the moves in SPX and Nasdaq. There are no signs of a bearish reversal but as I expect this is a...

Equity markets finally continued higher as expected with the SPX and Nasdaq pushing to new cycle highs while the DJIA continues to lag. The US$ and bond yields also reversed higher right on cue. So far so good... The roadmap for the SPX / ES remains unchanged as we push to new ATH's. I continue to expect that this latest rally is a small degree 5th wave until proven otherwise. The nature of the next decline continues to be critical to the overall bull market structure. Once this rally exhausts...

One of the key tenets of managing OPM is to continually undertake scenario analysis to ensure we don't lost sight of the forest from the trees. Given that the equity bears are finally relenting, I think it is now appropriate to highlight the key bigger picture counts for the markets. The biggest risk for these over-indebted equity markets is a dramatic rise in yields and subsequent rally in the US$. Now that the SPX has begun its small degree 5th wave to new ATH's as expected, it is now...

Important notice: I am posting this weekly update early as I am travelling for the next week and won't be contactable "Intuition is just years of learned experience residing in your subconscious - cash is a position" Late last week I made it very clear to my followers that I was NOT shorting the US equity markets.  US equity markets remained resilient despite weakness in Asia and Europe, strong PM's and bonds. First and foremost, I respect price action as years of experience has taught me that...