Tag: ZB #F

Thelma and Louis and Fixed Income

Interest Rates are approaching the CLIFF

Thelma and Louis made this choice ...
Thelma and Louis made this choice …

here’s a post that can allow you to catch up the saga w/in the fixed income market … whats funny is we have been SPOT ON w/ the dollar, commodities and fixed income.  the equities have just kept going UP UP UP.  Note, the BULLISH optimism in the equity market is HIGHER than 1987.  The thump is coming to the equity ecosystem.  The PATTERNS are showing it …back to fixed income –

http://bartscharts.com/2013/11/10/fixed-income-the-one-more-high-or-final-high-in-place-quick-looks/

going back 1.5 years here was one of the charts from fixed income market AT THE TOP:

long bond at the top
long bond at the top

here is the updated chart and, note, the cliff that the LONG BOND is sitting on …

Long Bond updated 1/4/2014
Long Bond updated 1/4/2014

we are sitting right on the cliff that has held rates at bay … I’ve used the “Pitchfork” method to help define the trend line using the “major” impulse low that started this run in 1981.  the red line is a simple 1.27 expansion of the construction of the Pitchfork.  It CREATED the trend line … remember 1.27 is the square root of 1.618.  Also, note the blue arrow is the LARGEST measured move correction since the 1981 origin.  IF/WHEN we lose this CLIFF prices should fall to the level shown …

below is a DAILY chart showing a POSSIBLE count.  Note, looks like we are finishing up a 3rd w/ perhaps that break into the target shown.  Here’s what we need to really pay attention to … in the past, when this trend line was hit PRICE exploded.  We are, at a minimum, respecting this support but price action doesn’t appear to be very bullish in/around here.  Just take note … again, a break here will target the 123 level.

long bond daily count
long bond daily count

 

2014 is going to be one heck of a fun journey …

rock on, ok?

BART

 

 

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