Volatility Reports 8/25/23

August 25, 2023

Volatility Reports 8/25/23

Market Timing. It’s a thankless job but someone must do it, think about it. Who else is going to keep your investments out of trouble?

{See Chart Gallery}

Long Term and ten-year government bonds have worked off their mini panic low as highlighted in the chart gallery. That rally gave way yesterday with their market pushing off from under new I-T resistance aka old support zone. Levels change monthly.

Without TEM cycling to a new extreme, bonds may tread water for another day or two. With that in mind, the trend remains down. While not as forceful as the middle leg down in 2022, as the market gets near an ultimate low, the ROC should increase.

The US dollar index has just set new highs for the year, taking out the June crest. Doing so, it moved the TEM to a new extreme, a rule #3 suggesting the uptrend is becoming extended and due for a change. These types of conditions behind a trend are textbook bull market, in that there is low persistence energy that plod along just like a bull may be envisioned doing.

Bottom line is both rates and the green back have higher to go short term, I would tee off climatic action if not the bonds making a “V” low on well broadcasted bad news or one of the risk markets falling out of bed.

Leading the decline is the unfolding bear market in China, with their major averages par telling of what it sees as the wrong choices by the central government. As the chart shows the multiyear triangle breaking down, which event had my friends at EWI fooled who sustained their bullish.

However, the bad news is not being ignored by the Chinese and down 25% from its late 2021 high and 17% from the secondary high in 2022. New lows are expected at a minimum below 380.

Another leader and bellwether in this era is Bitcoin, the name that has branded all Cryptos. It has finally broken below its descending channel – a 1-2 series in Elliott wave terms. In the terminology of our volatility model, it has reached a S-T panic extreme and is saying at that level. At the same time the market is walking down its lower Bollinger band, which is typical of a panic decline. Its prices have been mkovi9ng sideways but any break to new lows is expected to become long bars.

Taking the next step is here.