RARE FLAG ALERT: Exodus Nearly Chimped Out — All is Fine For Now

Earlier today an apocalyptic flag was given in Exodus, a forced oversold signal that made all scores plunge. On face value, it looked like an error — an aberration of some sort that happened as stocks climbed higher. It was, indeud, the rarest of flags and it has never happened in our 10 year history.

The reason?

Correlating factors with bond yields and equity prices hit a tipping point. This is supported by decades of research that proves, inexorably, stocks do well when yields go higher. This trigger is tied to the 30yr bond. Since then yields have gone back down and the flag was removed, but if yields should race lower again — the scores of Exodus might be entering a phase of suppressed scores which will change the dynamics of all oversold/overbought prices.

Aside from merely grading stocks based on technicals and fundamentals, we have a ‘sub rosa’ category tied to currencies, commodities, treasury yields — which is also pinpointed at specific sectors. For example, lower oil prices is a negative for drillers, but a positive for airlines.

Into the bell, you should be disappointed in the market — giving up a gigantic rally like this. From what I’ve gathered, the only reasonable area of investment today is crude and crude related stocks.

I exit the day happily long CHK, ESV, and FTK.