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00:00 Speaker A
It was risk off today and there’s really no getting around that. So let’s take a look at some of the charts. Start with the Dow here, that was down 870 points or one and three quarters of a percent. You can see closed by the lows and on some of these days you just sink and you really just crash in the close. So I guess my point there is, could have been worse. Nasdaq down 2.4%. A lot of the mega caps which have not been doing well recently, they really didn’t do well today. and the S&P 500 just a little bit worse off there. Again, really closing down uh close to those lows of the day. and even the Russell 2000 which was a bastion of strength. We were talking about the small and the mid caps last week, were green. Meanwhile the big ones, the majors, they were red. Well, that was down 1.2% as well. And if we look at the sector action, just want to show you real quick here that Staples was the only thing in the green today. and we had a warning last week. Remember the the sector setup was very defensive. uh Staples had their biggest five-day surge at one point
01:21 Speaker B
That was a yellow flag right there.
01:22 Speaker A
Yeah, since 2020. So let me show you. I cooked up some stats here. This has to do with what the VIX is doing. The VIX jumped about four five points today and I looked at what happens with the S&P 500 after you get a jump like that when the VIX has been quiet for a month. And so one week later, up about 3/10ths of 1%. You can see the win percentage, 58%, not that great, but you get a month out, 2.4%, 92%, three month out, 5% and 75%. And then one year 15% and 82%. Uh those are some really good odds. Again, this is a win percentage right here, percent positive and this is a return right here. So, historically speaking, this is usually a decent setup over the long-term, just not over the very short-term, but there were two outliers. One of them with 2007, the lead up to the global financial crisis and the other was 2021, the lead up to the 2022 bear market. So could be the start of something bigger, but history says uh we’re still on the bull side right now.
02:44 Speaker B
What would be, in your opinion, the big theme you’re watching?
02:51 Speaker A
I got to say it’s Cell America. and today was really about the bond market and for that matter, that’s what the Trump 2.0 presidency has been about. So let’s take a look at what was happening in US Treasuries today. And uh this kind of started overseas. A lot of people are going to point to Greenland and uh some Danish funds selling United States Treasuries. I got to tell you what’s happening in Japan right now, the vigilantes are in control. They are in revolt. The 30 year in Japan jumped 26 basis points today. Uh we haven’t seen anything like that in the US since 2020. So here’s the 30 year. Ours was only up eight basis points to 4.92%. But I want to show you the three-year chart here because this is very important. Um anytime that we have snuck above or very close to 5%, there’s once, twice and this happened a few times over here, we got a roll over in stocks. and it wasn’t for necessarily for the long-term, but it did cause some problems. And what you’re going to notice is over here and right here, uh we did kind of see a fast rapid decline in yields to lower levels and that supported stocks. But what’s happening right now, you can see that we’re actually, we can draw a trend line here. It looks like this thing is forming a long-term pennant and wants to break out. Doesn’t mean that we’re going to break out imminently, we could still consolidate for a while, but long-term there’s a very strong likelihood that we break up through that. Now, longer-term yields above 5% have huge implications for the Federal Reserve, monetary policy, and I don’t think we have time to get into all the ramifications here, but remember what Stephen Myron said back in his back in his confirmation hearing, he was talking about the third Fed mandate. Yes, there were three. moderate long-term interest rates. I think we’re going to hear more of that.
05:24 Speaker B
What about crypto?
05:25 Speaker A
Let’s do that real quick here because Bitcoin, Hey, risk includes Bitcoin. See number one. So Bitcoin was behaving like a risk asset. Um as far as uh the safety trade, it was not doing it. and let’s take a look at what Bitcoin was doing. It’s sitting below 90,000 once again. This is a three-year chart and so one of the things you’re going to notice here, broke the long-term trend line. This is nothing new. but what I do want to show you is that we were looking at a short-term uptrend and it was very narrow, but we are now in danger of breaking that. 90,000 kind of my line in the sand for that. So it looks like Bitcoin uh back into it might be drifting into a short-term downtrend. and of course, a long-term trend here is also down.
06:17 Speaker B
All right, thank you, buddy. Appreciate it.