Sustainability of the Risk Off Trade

One day sideways and one day down, (even a big day breaking important support) does not a trend make. So we have seen the cumulative effect of 3C building negative divergences suggesting a wicked move down, but confirmation can't be taken for granted and it can't be taken lightly.

To trade, there's a certain amount of ambiguity that YOU HAVE to live with, you can't trade otherwise, but what differentiates a trader from a gambler is knowing when you have the odds on your side.

One way to look for confirmation of a truly risk off trade is to look at the flight to safety trade, in this case since the PMs so far are back to legacy arbitrages, Treasuries are the obvious, most liquid place to park money.

Please go back and read this post from Friday if you didn't already. This was one of the early pieces of the puzzle that kept me and many others short through the uncertain weekend.

 If you read the article linked above, then you'll know that the 1 min chart above and the two min chart below both shows selling exactly where we should have expected to find it and accumulation exactly where we should have expected to find it. This is important confirmation if for no other reason then a way to calibrate the 3C readings.

 In retrospect, the accumulation was even larger on the 5 min chart, even early on the 28th.

 On the 15 min chart today, look at the leading component while prices were still relatively flat.

As for 1 hour volume, this s the biggest move we've seen since September.

TLT, the symbol used above is 20+ year treasuries. It's the closest I have to the 30 year and includes 30 years (at least that has any volume to it). Today the 30 year's yield dropped 24 and a half basis points which is the single biggest 1 day decline in nearly 3 years (remember the yield moves opposite to the price of the bond). With that volume, it looks like we just saw incredible rotation out of equities and in to the safety of treasuries.

Furthermore, I have to wonder if this will effect the "Fad's" thinking going in to this week's meeting. Usually they want to prop the market up, but since the repatriation of European capital (selling T's), you might wonder if the FAD doesn't actually welcome this event?