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Changes to Matrix:
Historical study of leverage underway.
Japan has generated a signal. The signal is not Triple, so it's probably not worth pushing a position.
The backdrop for US stocks, a setup defined strictly by the alignment of VIX and sentiment model, has remained consolidation since 07/26 (line 80). Bullish agreement (alignment) is closer than bearish, but that's not a forecast. The majority, growing more pessimistic with each downtick, will be on the wrong side of the trade when the two models agree. Smart money is watch the cycle of TIME (BrST) to time the transition. The sentiment model reaches the cyclical mean in 4 weeks.
Consolidation was never a prediction of a bear market but rather and indication of short-term cause building within the cycle of Accumulation and Distribution (see below). Rising interest rates is the headline explanation for cause building for now. Disciplined investors watch the reversals for guidance. Closes below bearish reversals (below) generally suggests continuation to lower reversals. Close above bullish reversals suggest the opposite.
The current decline could be nothing more than a reset of the weekly BuST in many of the overextended US stock indices.
BuST & BrST > 0, observations made in the daily, weekly, or monthly time frames, warn investors where upside or downside alignments are pushing against the cycle of time. The computer defines these alignments as Early, Mid, or Late. Late cycle alignments are vulnerable to reversal. A daily BuST or BrST > 2, for example, suggests a growing probability of consolidation ahead even in Early and Mid cycle alignments.
Using the Matrix
The value of the Matrix is far more than price. Trends are a function of price, volume (force), volatility, and TIME. The order of their importance is as follows: (1) TIME, (2) volatility, (3) volume & price alignment. Volume and price alignment, a setup that triggers action, favors Grade A & B, early cycle markets under high compression (↓COM). ↓COM suggests extremely low volatility, a quiet trend ready to explode into high compression (↑EXP). Weekly and monthly breakout signals are not finalized until the end of the week and month, respectively. Signals generated before that could be temporary. Keep this in mind when reading alignment.
Suggested Reading: The Cycle of Accumulation and Distribution (CAD), Leverage Oscillator (LTLO), Diffusion Index (DI), Volatility Bandwidth (BW), Compression (COM), Expansion (EXP), Alignment, Upside Alignment, Downside Alignment, Sentiment Model, Intermarket Trends, VIX Model, Economic Activity Composite, Long Term Cycles.
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Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.