Treasuries

Treasuries seem to have a little short term information in them, but also this is ANOTHER example of the multiple trends playing out at once.

I don't know if Smart Money has an idea of what is going to happen, we know that some of the best traders in the world are Congressional Staffers so that would imply that while the TV tells us everything is in the air, these guys have an idea on what is really going to happen and I'd expect some of that to filter to Wall Street.

Here are Treasuries/TLT which are considered the "Flight to Safety Trade", so these should move more or less opposite the market, when traders are afraid they take money out of stocks and put it in Treasuries, when they are feeling confident about the market moving up they take money out of treasuries and put it to work in stocks. So the price action in treasuries should be roughly the opposite of the market, but more importantly for our purposes, the underlying 3C signals should help us (at least act as another piece of evidence or piece of the puzzle) to determine the outlook.

 Starting form the short term intraday 1 min we see the negative divergence in the afternoon, this is the exact opposite of the market's positive divergence in the afternoon, the market moved up and Treasuries moved down. Remember at the close on the 1 min charts the market averages had negative divergences suggesting early weakness today, TLT had a positive divergence suggesting early strength today and it gapped up just as the market gapped down.

Currently the 1 min chart is exactly in line with price and this is the frustration I'm dealing with in most assets in this timeframe at this moment.

 Look at the 2 min timeframe though, this is still intraday, it's still a signal that could easily play out today or just get worse and create an expectation for an even larger move just as futures did overnight.

We see a negative divergence yesterday afternoon which panned out and a leading negative divergence right now which is even worse.

 The 5 min chart is also showing a leading negative divergence. If I had confirmation in a lot of places, the way I would interpret this chart is that the pop to the upside (the SPY Jan. Call trade) would last more than a day and would be quite strong, probably even stronger than I'm currently imagining and the market tends to exceed your expectations even when you are exactly right.


 Now at the 10 min chart, this is where we have some transition and I believe separation between the two trends, this isn't that negative so I wouldn't expect this to reflect any of the market upside, it's more of a transition point for the second trend, the downside move which is expected to be longer and larger.

I showed you virtually the same thing yesterday in Financials using FAZ.

The 15 min chart is leading positive, this means the longer term players are positioned for a defensive play, expecting market downside and Treasuries to benefit from the flight to safety that causes.