Treasury Bill multi-day increases as predictor of S&P 500 Sell

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Throughout the rally since April, Treasury Bill multi-day increases like the one we are seeing now have typically predicted corrections in the S&P 500 by 1 week to 2 days.

Strategy: short ES (when other signals such as VIX confirm) and long 10-year Treasury futures.

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تم فتح الصفقة

1. Strong increase in the 10 year note, now deep in profit with Feb 19 136.5 call options. Will hold for now - hopefully over 137.

2. New trade: March /VX also significantly above 27 on strong increase today. My ES play is 3895 Put options for 2/12 (worth about 18.00 each) and 3850 puts for 2/19 (worth about 23.00). My decision to sell ES was confirmed by multiple signals including: BTC selloff, /VX rapid increase, hitting an upper fib trend line from November. Still, very risky trade.

Make sure not to risk more than you can afford to lose!

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تم فتح الصفقة

There was definitely a fake signal on August 14, 2020, and other multi-day increases. However, two things:

1. The increases leading to a sell appear to be "trend changes" to upside not just any continuous increase
2. One could consider the August 14 trend change in treasuries (which failed about one week in btw) a prelude to the September sell. It wouldn't have been a great trade to hold a short position those two weeks, even though it would have been profitable within 3, so that's why it's important to look for other confirming signals like BTC drops/spikes in /VX futures (the actual beginning of a selloffs - underrated!).

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تم إغلاق الصفقة يدويًا

This was an accurate signal but a shitty options play. I realized this fairly soon and closed them last week on a 3886 dip that went nowhere.

Right now, the signal is quite bullish. If I do an option play, it'll be longer dated ATM calls or, better yet, put spreads.

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ملاحظة

I'm learning, and this was actually a reliable signal. It just took a week to really kick in. And now, we are seeing the same thing again even more strongly. This is bearish for SPY next week or perhaps the following week.

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ملاحظة

still running up 1 month later...