The VIX CBOE Volatility Index is below 15%, indicating investor confidence.
But the risk premium on Baa-grade bonds (Moody’s lowest investment grade, compared to the 10-year Treasury yield) remains elevated. Corporate bond investors are still wary.
10-Year Treasury yields are headed for a test of resistance at 2.00%/2.10%. There is no sign of inflationary pressure, so outflow from Treasuries is more likely indicative of their extremely overbought position — with yields near record lows — and suggestions from FOMC minutes that quantitative easing may be scaled back later in the year. Breakout above 2.10% would signal a primary up-trend with an initial target of 2.40%.
The S&P 500 is advancing strongly. 6-Monthly Twiggs Money Flow rising strongly indicates a healthy primary up-trend. The index is overdue for a correction, but this is likely to be mild.
* Target calculation: 1475 + ( 1475 – 1350 ) = 1600
Nasdaq 100 also signals a healthy up-trend, advancing towards a target of 3400*.
* Target calculation: 2900 + ( 2900 – 2500 ) = 3400
Bellwether transport stock Fedex respected support at $90. Recovery above $100 would confirm the primary up-trend is intact. A bullish sign for the economy.
Follow the trend but keep an eye on risk measures like the VIX and Baa risk premium. These are uncertain times.
Would love to see comparison on stocks with 2007 & 1999 in terms of Twiggs especially
What about Indian market ? Is it heading towards all time high even without participation of midcap & small caps and especially without retail participation ?