Tag: fixed income

Interest rate forecast …

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
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 !!!!
HI, I am fully aware the FED is leveraged beyond thunder dome !!!!

 

Main20140817110505 Main20140817110951 Main20140817112020 Main20140817113414 Main20140817120553 Main20140817120935 Main20140817121143

Jackson Hole … let the games begin

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 !!!!
HI, I am fully aware the FED is leveraged beyond thunder dome !!!!

 

Main20140817110505 Main20140817110951 Main20140817112020 Main20140817113414 Main20140817120553 Main20140817120935 Main20140817121143

the initial impulse move … is the DNA

30 year fixed income continuous contract
30 year fixed income continuous contract

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.

stay tuned ….

here’s the dollar index, takes about 10 minutes

dollar index squares
dollar index squares

fixed income … the one more high or final high in place quick looks

take the time to catch up on  by reading/viewing charts from the below links…

last post:

http://bartscharts.com/2013/11/05/fixed-income-time-is-right-but-what-about-the-price-and-the-underlying-trend/

post that warned of a very important top – before I was blogging:

http://allstarcharts.com/are-interest-rates-at-a-key-inflection-point/

bonds sold off hard on Friday and what could be the start of another leg down.

let me digress for a bit .. I LOVE Elliot Wave – when it’s easy to count.  LOL – no kidding if you can pay attention to corrections and their form (flats, zig zags, triangles, expanded flats, double threes, etc) and live by the rules (3 can’t be shortest, 2 can’t go above/below the beginning of 1, 4 can’t go past the end of 1) you can get kind of dangerous at it.  when I try to force a count it’s probably correcting or “the grid is shifting” and the count will, ultimately come to me.  so, am I on a 5 minute chart counting every squiggle?  nope … however, I do look for counts on monthly and weekly charts.

back to fixed income … if we look at the low in the summer of 2009 we’ll see the next leg up on bonds (the last?) start in earnest.  Wave 1 peaks out and, as you can see, I have labeled to areas where 1 might have finished.  then we go down into 2 and then this is where it gets interesting … if we make (1) = 3 then the correction BLOWS THRU 1 and we have broke our rule so we have to sub-divide and then NICELY count (1), (2), (3), (4),(5) into the all time high and that high becomes 3.  for me, it’s the only way that I can count it and NOT break rules.

w/ that in mind, we see a 3 wave move down (a) and then a 3 wave movement up (b) and now we are rolling in a pretty devastating C wave…the “internals” of this C wave are very nice in that 3 was exactly 1.618 of 1 and IF 5=1 we land right on the top of the wave 1 that began the move in 2009 and it also equals the MAX/EXTREME corrective move that has ever occurred in this 30+ year move…IF that level holds and we start going up then, we might be up to another high.  Sounds crazy but that is what the chart is telling us w/ regard to “one more high”

the chart:

November 10 2013 LONG BOND MONTHLYNovember 10 2013 Long Bond Weeklyhere is the bearish count – note the entire 2 was a flat type of correction and therefore, you “could” fit this one into the picture….either way, we are on the right side of the market and I feel pretty certain that we’ll target that long standing trend line at 127-128 (red line) and/or the 124 level.  I expect rates to rise accordingly as this target area is attacked.  Stay tuned …

Long Bond w/ a modified count to show the all time high
Long Bond w/ a modified count to show the all time high

Fixed Income – TIME is right but what about the price and the underlying trend?

to catch up on prior fixed income posts:

http://bartscharts.com/2013/10/30/its-fed-time-and-an-explanation-of-the-recent-price-action-in-fixed-income/

http://bartscharts.com/2013/10/21/plotting-the-next-move-in-fixed-income/

November 5 2013 30 year bond

keep an eye on fixed income.  the two triangles shown at the bottom of the chart represent the PRICE and TIME extremes that have occurred w/in the context of the top in Bonds last year.  Note, the current rally has not exceeded either one in PRICE but we are definitely in the time window of a move down to start.  IMHO it’s too soon to call a BEAR market in fixed income as we have just completed a “normal” measured move correction w/ in the context of a 30 year bull run.  HOWEVER, we will see early signs appear to give a heads up …right now, w/ this time component being present it will be very informative to watch price action as continued strength above the blue horizontal lines during this TIME frame will cause prices to surge UP thereby suppressing YIELD once again.

TBT another move higher?
TBT another move higher?

Plotting the next move in fixed income …

fixed income has bounced rather nicely and now the big question is “are we going to go to new highs?”

1.5 years ago, as fixed income flirted w/ the all time highs for 5 months we correctly saw multiple correlations that put the sell pattern present in context …

http://allstarcharts.com/are-interest-rates-at-a-key-inflection-point/

from there, the bonds fell pretty hard into the lows that were hit a couple months ago:

http://bartscharts.com/2013/08/20/fixed-income-revisited/

this happened BEFORE the infamous FED meeting last month and I held my stance that the Buy Bonds (Sell Yield) was the side of the trade to be on:

http://bartscharts.com/2013/09/18/bruce-buffer-of-ufc-and-the-fed/

now, the question is will the bonds seek new highs suppressing yield to a great degree?  there is a count that favors this action, but honestly, I don’t know ..just have to realize that the correction that has occurred in fixed income is almost precisely in line w/ the “normal” corrections that have occurred in the context of this 30 year BULL market. things are truly about to get very very interesting ….

30 year continuous contract found major support ... a dead cat bounce or another move to higher prices .. .stay tuned
30 year continuous contract found major support … a dead cat bounce or another move to higher prices .. .stay tuned

Fixed Income Revisited

First off, I would like to thank JC Parets of http://www.allstarcharts.com for finally pushing me to start blogging … “JC, thanks….”

JC gave me the unique opportunity to “guest post” on his blog site a couple times and one of my earliest posts was the following:  http://allstarcharts.com/are-interest-rates-at-a-key-inflection-point/ 

Let’s revisit fixed income, as it is getting, rightly so, some significant exposure……

As you can see, we got “lucky” on our pattern at the top in/around the 153 level.  One thing I was seeing and now I’m simply putting it out there is this count might not be complete.  When we look at the long term chart we can see that we are at an extreme in price and time for corrections in this 30 year BULL MARKET and, going down to a weekly chart, we can see an orderly pullback in a “a”-“b”-“c” corrective move. Perhaps a little lower and then, believe it or not, a potential rally to slight new highs ….?  Call me crazy but calling it like I see it.  At a minimum, this move is very oversold so a bounce in/around here is a real potential.  Stay tuned …..

30 year continuous contract
30 year continuous contractMain20130820141459