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New alignments: Biotech
This might come as a great shock, but the US China trade negotiations have stalled again. I guess the positive comments - how everyone was best of friends, as both sides sanctioned each other's companies from electronics to defense, were not accurate. The US acts as if it can levy tariffs without repercussions, but this is not true. US consumer are footing the bill already, and China could restrict sales of rare earth metals, which the US has very little processing capabilities. It's not that rare earth metals aren't found outside China but rather they control expensive and environmentally toxic processing of them.
The blame battle between the President and Fed continue. The President asserts that the Fed raise rates too long and quickly. This decision slowed the US economy, because as most politicians believe it to be completely manageable by human hand. The reality that the invisible hand and cycles control the business cycle never come up. The economy will continue to do what it's going to do until 2020 when it will slowly bottom. It doesn't matter what the Fed does.
Politicians only care about short-term elections. Fed bashing and finger points are standard operating procedure to blame cycles on anyone but themselves. It has been reported that the President has asked his economic advisors to find ways to weaken the dollar into the 2020 election. As if every other politician on the planet is not asking the same thing from their advisors.
The sentiment and risk models are approaching bullish agreement, a setup that generally coincides with upside accelerations. This potentially bullish signal comes as bearish calls on US stocks rise. One thing I have learned over the years is ignore calls. I know it's hard, but most them are completely useless in comparison to the message of the market. The sentiment and risk models are viewed in line 54 and 59 of the Matrix.
The Matrix may not be updated until the end of the week as scheduled connectivity upgrades are planned. The Matrix requires a high speed connection to download and process the data. I expect the diffusion indices to be published by the weekend for sure.
Using the Matrix
The value of the Matrix is far more than a study of 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.