Minksy Moment?

Into June 1st; the EU banking crisis contagion is deepening. And retail investors are concerned about safety of assets and less so about return on assets  -- as IBD reported yesterday that 5.86B in net US stock fund outflows in April following 9.79B outflow in March and 11 of the past 12 months have experienced net outflows from retail investors. Where is all the money flowing? IBD reports retail inflow to bond funds of 24.61B in April and hybrid funds (stocks and bonds). This is evident as per the trend in US 30yr Treasury Bond chart below that reveals the velocity of flow into the 'safety' theme on the back of global macro risk.

The US 30 Yr Bond is breaking out big time. We saw earlier this week that it was finding support on the previous months highs (brown line channel) and has now moved aggressively higher this week.

This inverse move to stocks was part of our thought process coming into the trading week. And we can see below that the DOW Industrials mini future (YM) is failing below its previous monthly lower boundary level or pivot and is threatening to make 'new' lows for the year as per the chart below. See the 'orange' line reflecting these potentially new lower prices.

When we see the Bonds rallying as aggressively as they are and risk assets deflating as they are, we need to pay attention to this as traders and investors as markets are speaking that things are not healthy in the system.

Lets just look at a few other visuals of risk assets below

Above, we can see the Aussie Dollar, which has collapsed back from 1.07 (to USD) into .95 and the strong-hold monthly lower channel boundary in line with the current price. The Aussie Dollar is an important gauge into commodity-based sentiment and macro-asian economic state, which is also weakening on the back of today's China PMI data release.

Below, we can see the Oil market intensifying to the downside.

This will present to be a very good buying opportunity in risk assets, but we have to be cautious from the long side until we see evidence of market confidence re-emerging. We will have to use different techniques to gauge this starting on a micro-structural level.