If your a technician, you can’t help but notice the very long (month ish) consolidation occurring in the bond market.
Today’s price action appears to want and break the support that has been around since March 15th. As you can see above, we do some ‘basic’ projections and right when the neckline breaks there is minor support (blue projection arrows) and then the BIG support w/ the blue rectangle present. A lot of math coming into that level. I believe that is the crucial level.
As you can see from the weekly chart above, the “time” of the corrections have been pretty symmetrical so from a timing perspective certainly looks like this “bounce” has run it’s course for one more leg down.
From the ATH, it’s a pretty clear count and I’m labeling this as a 4 completing/completed and another leg down (rates go UP in this case) into the .618 from the 1981 low (40+ years ago) in bond prices. Note the blue measured move above .. that was the largest correction in 40+ years. We take harmonics from that and you can see the square root of 3 harmonic nailed the low precisely. We have a .618 retrace, 1.618 extension, trend line coming from the low in 1981 and a harmonic of the largest prior correction.
That level is a good level to BUY – if we get down there.
TBT has fallen into the bottom level of BUY zone and I’m long TBT in/around 18.
A lot going on w/ his chart but wanted to show you some “other” geometry that I was working … you see, we can make arcs and develop trend lines using the geometry of the chart but also, using the TIME and PRICE to define the vectors.
in this case, we take the all time low and draw the bottom of the square to intersect the “time” of the high. that will define our arcs and the square. the most important aspect of a square is the 45 degree angle (red line) and that line we then “copy” and “paste” to the bottom right of the first square and, well look at that … it intersects the LOW almost exactly. we also draw another square (and we can/will keep drawing these squares to find the trend lines running the show) and notice how the two 45 degree angles TIMED the low almost exactly .. (FWIW, this was a precise 1.618 AB =CD and a .618 retracement along w/ the same percentage corrective move that drove price into the all time low … came in around 21-22 percent decline.
so, while we do have the traditional “slap a retracement grid and look for the .618 retracement and a whole lot more …
take some time to study this chart .. try to understand it as it’s very helpful, indeed.
and, w/ all this work, I’ll consider it “wrong” if we get a daily close below 16.08 (.786 retracement)good weekend to everyone …
05/22/2017 – take note of the ‘potential’ for the polarity principle to take place. in this case, where there is resistance there ‘should be’ support.
***note: the gap down below the former resistance w/ this months action. something to watch … a gap down and move lower signifies higher interest rates. monitor closely.
8/28/2014: the 2.358 level did not hold. In fact, in the way I look at the market, the PATTERN caused the gap. the gap below the pattern is a big deal. I’ve shown the projection/pattern that “caused” the low at 2.322. right now, looks like our low back on August 15, 2014 will be attacked.
I’m not trying to call for a increase in interest rates or a continued fall in interest rates. frankly, I don’t have clue about the fundamental aspects of what the Fed is doing or not doing. What I do know is PATTERNS and sometimes they work (which they do — alot) and sometimes they don’t. This pattern, below, clearly failed at the level we were expecting to hold. but here is the deal …on the way up w/ interest rates it was CLEARLY 5 waves up … so this means we are CORRECTING and there is, supposed (the operative word) be ANOTHER WAVE UP ….
10 year weekly
8/22/2014 – if you read below you’ll read “my bet is on the TEN YEAR holding this low and starting back up ….” If that is the case then we have a VERY NICE PATTERN appearing on the Ten Year Treasury Yield that has multiple confirmations going for it ….remember folks, this is a 5 minute chart.
also, I have “copy/pasted” the earlier this week post on Jackson Hole and the fixed income structure …
the PATTERN:
it’s a nice corrective pattern a-b-c. expectation is that “c” is in work and “should” take yields down to 2.358.
c = 1.618*a right at ….2.358.
a 1.618 extension of the “b” wave takes us right to ….2.358
a retracement from the “key” low that we have watched for a while is .618 at …. you guessed it …2.358.
when all of these numbers line up … in this case SUPPORT usually occurs.
make it a great weekend …
5 minute ten year rate PATTERN
one last … I have ABSOLUTELY NO IDEA what Janet Yellen and the FED did this week or what in the world was said in the meeting minutes. Frankly, I don’t care … PATTERNS, PATTERNS, PATTERNS.
CLIFF NOTES: folks, follow this link to catch up on the Fixed Income story: http://bartscharts.com//?s=fixed+income
CLIFF NOTES 2: this is a tough one … the pattern in the fixed income market (30 year) failed and has gone much higher//the pattern on TBT failed. HOWEVER, the long standing target on the TEN YEAR Treasury Yield was hit on Friday. Quite frankly, I didn’t think it would get hit as the 2.4 level provide some nice support and then, ultimately failed. So we are at THE critical level for the rate structure on the 10 year. I’ll stand by my guns this is corrective in nature, but the Ten Year needs to stop here or we’ll vacuum lower and rates will continue to plummet. I also updated the 30 year count to show a potential NEW HIGH if this count is correct. I will be the first to admit that our pattern failed on the 30 year/TBT. In fact, we found the support for the long bond ( http://bartscharts.com/2014/01/04/thelma-and-louis-and-fixed-income/ ) and it was at a very crucial level at the time of that post. It held and since then has rocketed higher (lower rates).
CLIFF NOTES 3: we are at a CRUCIAL CRUCIAL LEVEL …. not trying to be wishy washy as we have to take a stand but I can see the case of either direction. But in order to take a stand and some risk – my bet is on the TEN YEAR holding this low and starting back up ….
CHEERS!
HI, I am fully aware the FED is leveraged beyond thunder dome !!!!
8/22/2014 – if you read below you’ll read “my bet is on the TEN YEAR holding this low and starting back up ….” If that is the case then we have a VERY NICE PATTERN appearing on the Ten Year Treasury Yield that has multiple confirmations going for it ….remember folks, this is a 5 minute chart.
also, I have “copy/pasted” the earlier this week post on Jackson Hole and the fixed income structure …
the PATTERN:
it’s a nice corrective pattern a-b-c. expectation is that “c” is in work and “should” take yields down to 2.358.
c = 1.618*a right at ….2.358.
a 1.618 extension of the “b” wave takes us right to ….2.358
a retracement from the “key” low that we have watched for a while is .618 at …. you guessed it …2.358.
when all of these numbers line up … in this case SUPPORT usually occurs.
make it a great weekend …
5 minute ten year rate PATTERN
one last … I have ABSOLUTELY NO IDEA what Janet Yellen and the FED did this week or what in the world was said in the meeting minutes. Frankly, I don’t care … PATTERNS, PATTERNS, PATTERNS.
CLIFF NOTES: folks, follow this link to catch up on the Fixed Income story: http://bartscharts.com//?s=fixed+income
CLIFF NOTES 2: this is a tough one … the pattern in the fixed income market (30 year) failed and has gone much higher//the pattern on TBT failed. HOWEVER, the long standing target on the TEN YEAR Treasury Yield was hit on Friday. Quite frankly, I didn’t think it would get hit as the 2.4 level provide some nice support and then, ultimately failed. So we are at THE critical level for the rate structure on the 10 year. I’ll stand by my guns this is corrective in nature, but the Ten Year needs to stop here or we’ll vacuum lower and rates will continue to plummet. I also updated the 30 year count to show a potential NEW HIGH if this count is correct. I will be the first to admit that our pattern failed on the 30 year/TBT. In fact, we found the support for the long bond ( http://bartscharts.com/2014/01/04/thelma-and-louis-and-fixed-income/ ) and it was at a very crucial level at the time of that post. It held and since then has rocketed higher (lower rates).
CLIFF NOTES 3: we are at a CRUCIAL CRUCIAL LEVEL …. not trying to be wishy washy as we have to take a stand but I can see the case of either direction. But in order to take a stand and some risk – my bet is on the TEN YEAR holding this low and starting back up ….
CHEERS!
HI, I am fully aware the FED is leveraged beyond thunder dome !!!!
CLIFF NOTES: folks, follow this link to catch up on the Fixed Income story: http://bartscharts.com//?s=fixed+income
CLIFF NOTES 2: this is a tough one … the pattern in the fixed income market (30 year) failed and has gone much higher//the pattern on TBT failed. HOWEVER, the long standing target on the TEN YEAR Treasury Yield was hit on Friday. Quite frankly, I didn’t think it would get hit as the 2.4 level provide some nice support and then, ultimately failed. So we are at THE critical level for the rate structure on the 10 year. I’ll stand by my guns this is corrective in nature, but the Ten Year needs to stop here or we’ll vacuum lower and rates will continue to plummet. I also updated the 30 year count to show a potential NEW HIGH if this count is correct. I will be the first to admit that our pattern failed on the 30 year/TBT. In fact, we found the support for the long bond ( http://bartscharts.com/2014/01/04/thelma-and-louis-and-fixed-income/ ) and it was at a very crucial level at the time of that post. It held and since then has rocketed higher (lower rates).
CLIFF NOTES 3: we are at a CRUCIAL CRUCIAL LEVEL …. not trying to be wishy washy as we have to take a stand but I can see the case of either direction. But in order to take a stand and some risk – my bet is on the TEN YEAR holding this low and starting back up ….
CHEERS!
HI, I am fully aware the FED is leveraged beyond thunder dome !!!!
spent last night w/ my wife of 23 years and best friend since we were 15, at the Andrea Bocelli concert …as a self proclaimed market musician on many occasions I found myself w/ eyes closed trying to hear the different chords/tempo and harmony being blended. it was pretty cool …so this morning I thought I would take you down a trip along “harmony” lane and talk about the initial impulse move or DNA of ANY liquid instrument.
the longer the chart time frame the better .. we have shown the ability of “nodes” from the late 1800’s taking part in moves that have occurred in the 2000’s. so if you have long term data, use it. in this case we are looking at the low on the bonds from 1981. this low created the very powerful 30+ year move in fixed income.
1. the bold blue arrow is the “seed” or “DNA” that begins this move … do you know it at the time? probably not. HOWEVER, after the first pullback (on a long term chart) you can start to assume a major inflected top or bottom is in place and start the trip down the “harmony” lane.
2. from that initial impulse move up (note it takes it account the slope of the move – you include PRICE and TIME) draw a SQUARE. Now, using “standard” trend line tools draw a 45 degree angle and then, well, your done. connect the 45 degree angle to the top and the low of the box and simply take a look at what appears. THE HARMONY/GEOMETRY of the MOVE.
now, as far as this chart goes we have a lot of “stuff” going …
1. note the largest corrective move in the 30+ year BULL RUN takes us into the 123 11 area.
2. note, this largest corrective move occurred during the 2008 thumping in equities. it’s already 3/4 over and equities haven’t even moved … hmmm.
3. if you look at the wave structure is sure looks like we are in wave 5 of 3 that “should” take us to attack that level indicated by the horizontal blue line.
4. note how the “trend line” and the “measured move correction” come together right in/around the 123-124 level.
5. let’s not forget, this is a massive BULL run so it would only make sense that the trend will continue. this 123-124 level will be the line in the sand, IMHO (h= humbled) opinion.
