I will claim, right now, to have ZERO IDEA or INTEREST what fundamentals drive interest rate policy. Not a clue. However, I will claim to be able to read charts to manage risk. Am I “right” every time … well yes, because I know where I’m wrong every time (TILT) because I’m a pattern dude.
That being said, I am hawking the Fed Fund Futures contract (FF #F) and this week we had the largest gap down (interest rates higher) since 2009. Note, right below this channel is a “window” that has not been “closed” so perhaps we see a move out of the channel and into the window. IF we have a WEEKLY close below the channel THEN believe we have changed trend and interest rates will be going a LOT higher.
Use your fundamentals and other technicals to derive and idea but please use these levels as key demarcation points.
Ten Year: approaching a KEY SELL PATTERN. Let’s do the “IF – THEN” …IF rates are continuing to rise THEN this SELL pattern will fail. THIS IS A KEY LEVEL. Here’s the chart:
TLT: here’s the beauty of PATTERNS. Correspondingly, we have a BUY PATTERN on TLT. I’m showing 2 buy patterns. 1 in the light blue is approaching or at the buy level. It’s roughly 120. The other (yellow) is lower and is down at 116.
IF you want to SHORT YIELD THEN one of these levels will work and the 10 year will hold. IF you are a LONG RATES person then the TLT levels will fail and rates should continue to rise.
One last thing … when you have a “change” in trend, the market will tell you. I have used the RSI (long term) in the past and want to call attention to the ratio of TEN YEAR / GOLD. Note, the last support found in this ratio was ABOVE 30 and, basically, on the BULLISH support zone. The market very well might be telling us something.
CONCLUSION: w/out ANY fundamental back drop – trust me they are important but I’m not smart enough to learn it – the charts below show me very important SELL and BUY patterns that are inverse of each other. One of them will fail (yield vs price) and THAT will dictate the direction of rates for the coming months … no matter what the talking head pundits on TV claim.
thanks for reading this far ….