US Bonds, Inflation? Equities Turning???

Equities and Bonds Hit key Technical Reversal Targets

The technical setups this week seem to be pointing toward all the same conclusion, EXHAUSTION! When we break down the following Bonds and Equities charts, we can’t help but think that the rotation out of equities and into bonds is just about to commence. One of the first charts that we want to display today is this one, if this doesn’t look significant to you then you are truly missing the historical levels of euphoria, we are currently witnessing within the equity complex:

This has been a consistent theme ever since the global central banks decided to print to no end and expand balance sheets bringing forward decades of capital to keep the concentrations of wealth acutely confined. With the central banks monetarists ways running amok, well its no wonder the mathematical construct known as Bitcoin is now a $1 Trillion dollar asset:

As far as the technical setup, well Magnelibra will continue to call for higher highs and a continuation pattern of the stock to flow model which points to $100k:

We have also been hearing talk of impending stagflation. Well one thing is certain, the money is there for that to happen, yet the reality is its concentrated among a very few hands, everyone else is taking on more debt just to keep up. So, we may get a brief bout of demand-pull inflation but we doubt that will have any staying power. The reality for now is there is ample equity premium in both equity markets as well as decent housing equity again, but the consumer is not fickle, rather the basic consumer will continue to take on more debt, via upgrading housing, keeping up with status quo and be beholden to ever increasing taxes from weakening fiscal state and local budgets. With all this in mind Magnelibra Econemotions would rather suspect a short-term demand pull to be very short lived and if the equity markets do indeed take a turn south, that inflation expectation will fall, very quickly.

No doubt shorter duration assets have been the beneficiary thus far as the US yield curves continue to steepen out and the Russell2k index has outperformed tech heavy longer duration equities. This is the obvious investment, hedge fund strategy at this point but things could change and you have to recognize when those turning points are close.

Let’s take a look at the US Govt 10Yr which hit our yield target and reversal level of 1.36%:

Notice how the fib. Reversal levels are lining up here in the US bond market as well as the equity markets. Let’s look at this Nasdaq which technically looks like its about to take a dump:

The SP500 looks very similar:

The Ultra Long end of the US bond market will confirm a possible trend reversal and equity rotation out if it can solidify a return and close above the 197-00 area:

We like the setup for the reversal and thus we don’t see the catalyst for the next leg up in equities, rather we are wondering what the excuse will be for the selloff…When we look at the Dax Index we have noted in the past that this area continues to hamper any attempts to move higher and 13900 is our line in the sand for now:

Alright let’s look at some of the other markets that we follow, the Euro Currency continues to beat around the 121 level and it hasn’t decided on the next leg, for us its pretty simple, close back above 122 or close below 120 and those are our defining levels:

The crude markets have also been sold into and the reversal off of the $62 level is key and a close below $59 suggests a $3 drop minimum to the $56 area:

Silver continues to also build a base around $27 and is looking for any excuse to resume the run to $30. However we must caution, if equities do indeed decided to move lower, then Silver will get hit as cash raising becomes a necessity, for now its above the 50eMA and that puts it in a continuation bull base building model.

Now let’s take a look at some of the tech equity giant charts, first up Tesla, where we posted a log price chart with our trend channel outlining some very lofty $900 levels where caution was easily warranted and since then has trended lower, now hitting $781:

Amazon’s bull base continues on but a dip below $3k and the flood gates of failure open so be on the look out here:

Alright that’s it, but we leave you with a little cartoon we saw this week. (Side note -we don’t care about your political affiliation this isn’t a jab at either party, rather its a jab at human arrogance and their false belief that our climate can be controlled) Here at Magnelibra Econemotions, our research has led us down a path of electromagnetics, of plasma physics and let’s just say, mankind stands zero chance vs the powers of the Sun, Birkeland currents, nor cosmic rays and our climate is an output of a very strict natural function. Now we hear vaccinating guru Bill Gates wants to put a permanent particle dust cloud into the atmosphere to stop all this global warming…barf, Maybe we should ask Texans what they feel about global warming after this week, where the freezing temps disabled the infrastructure in Texas and many were left without power, or maybe ask Chicagoans who have 2 ft of snow on the ground and haven’t seen temps above 30 degrees in weeks…well here’s the cartoon:

Till next time…good luck this week traders and investors!

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