5/12/20
Bonds: Spring Attempt Fails?
It’s clear, bonds attempted to spring higher once the prior lows were penetrated.
Then, TLT reversed and tested that support. Now, support may be failing right along with the spring attempt.
If there's a new daily low in today's session, and a close lower, it adds weight to a long term reversal scenario in bonds.
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5/11/20
Bonds: Reversal Continues
Inverse fund TBT, shows a potential set-up to go short (not advice) the long bond, TLT.
As mentioned by Sven Henrich in this update, rising interest rates at this point in time is not the mainstream view.
4/5/20
Bond Juggernaut About To Reverse:
The past week saw the long bond completing a Fibonacci 76.4% retrace. Weekly volume has evaporated to –73%, compared to the week of March 13th.
As stated in a previous update, bond liquidity was removed long ago. It’s great when the trend is up; no worries.
Problems (big problems) are likely when the trend reverses.
Examples of these types of liquidity/volatility problems have already shown up in the leveraged DUST and JDST funds. Essentially, liquidity and option bid/ask problems caused these funds to ‘blow up’.
Back to the bond chart: It says a nascent bond reversal may now be upon us. However, it’s early in the reversal (anything can happen) and price action is the final arbiter.
If the stock market heads significantly lower and the bond market moves lower as well, it’s the next step in wealth destruction for the ‘average’ investor.
Market safe havens no longer exist just as ‘investing’ no longer exists.
With all of that, one gets the sense, IRA confiscation can’t be far away. It nearly happened in 2008 – 2009. This down-turn could be (it already is) much worse.
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4/1/20
Bonds Test
This session looks like TLT is testing its up-thrust.
It’s clear from the Force-Index (bottom of chart), the upward energy and bullish demand is essentially gone.
- First, comes sentiment
- Then, comes volume
- Then, comes price
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3/31/20
Bonds Reverse
Price action is following the analysis; giving credence the 40-year bull market (in bonds) is over.
As shown, TLT has set up a huge trading range.
If the move lower is impulsive (see Elliott Wave), the bottom of the current move will be to much lower levels; well below TLT, 139.
3/27/20
Bonds:
Up-Thrust
Long bonds, TLT spent the entire trading session getting up enough steam for a last-hour push into an up-thrust condition.
The pre-market update indicated one scenario as “… we get a push higher all the way to the close.”
That’s exactly what happened.
We’re probably splitting hairs if one wants to wait for a move to the 75.4% Fibonacci level at 170. In addition, the previous measured move (wedge) target was 174.
However, price action itself has defined that an alternate wedge (on chart) may be in-effect. If that’s the case, a measured move is near the 171 level.
Is it worth it to get the last forecasted drop out of a move? Every single (professional) trader is looking at these levels as well. We may get there or not.
We’ll see what happens on Monday the 30th.
3/27/20
Bond Spike
Pre-market activity shows the market may be on its next leg down.
Bonds are up
“Flight to quality”: Right?
The tape says we’re in a terminating wedge; target in the vicinity of 174.
Changing the view on the Fibonacci timeline, counting the low (on 3/18) as day one, gives us a Fibonacci Day 8 at today’s session.
The market tends to alternate. What happened last time won’t happen this time. It’s not likely there will be an opening gap higher that immediately retraces as occurred March 9th.
More likely, is some kind of push higher throughout the day that reverses. Or, we get a push higher all the way into the close.
3/26/20
Bonds, Day 13
Fibonacci Day 13, from the all time high was the last (Wednesday, 3/25) session.
The market itself determines levels that are important. On the chart we see an axis line that morphed into resistance.
With the forty year bull market in bonds potentially over, we’re looking for significant and sustained reversal.
If one is trading the inverse funds profitably, they require the utmost skill as these funds are susceptible to negative (price erosion) bias and volatility problems.
A good example is the complete breakdown in JDST. Pulling up the chart of this inverse fund shows that it broke down when high volatility showed up in the gold mining sector.
As can be seen with this report, I got in JDST and got out with a 155% gain, just two days before the fund blew up.
The same can happen to TMV (and TBT) but most likely not until there is a major move lower in the long-bond (TLT).
3/25/20
Bonds Hit Channel
Ten minutes after the open and TLT is tapping up against the right side channel line.
Price action can go either way. However, at this juncture, it’s quiet and risk (of a short position) is low.
3/24/20
Bond Channel
Here is one view (chart) of what's happening in the bond market.
While price action pushed through the stop level identified in the 3/23, update, bonds appear to be at another potential juncture.
This session will be Day 12, from the high set on March 9th. There may be another attempt at new highs for the next two days to make it Fibonacci Day 13, or there may not be an obvious time correlation at this point.
Note that from the March 9th high to the low set on March 18th, was a Fibonacci 8-days.
3/23/20
12:08 p. m. EST
Bonds Retrace 62%
The hourly chart of TLT shows a Fibonacci 61.8% retrace. There's potential for a significant reversal.
Risk (of a short position) is low at this point.
A reasonable stop on a short position (long TBT, TMV … not financial advice) would be in the proximity of TLT @ 163.79
3/20/20
Bond:
Up-thrust
Futures market overnight session and pre-market open, shows long bond (10-yr T-note) in up-thrust position.
This may be the ‘correction’ before bond prices head decisively lower.
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3/30/20
Bonds Before Open:
Pre-market activity in TLT shows trading slightly higher at +0.02-pts.
The weekly chart shows TLT extended at extreme levels. Weekly up volume has contracted significantly and it appears we’re on the right side (declining side) of demand.
There could be a labored push to the 170 level to complete a Fibonacci 76.4% retrace. Price action itself will define this potential.
3/18/20
Update: 1:00 pm. EST
Trading halted (again): See 3/16/20, update below.
Update: 11:01 a.m. EST
Decades-long bond bull market, is complete; Excellent article from H.L. Vogel.
Update (pre-market)
Watching bonds closely for continued down-side.
The S&P is down over 6% in the pre-market. Bonds are flat to lower (not a good sign for the bulls).
3/17/20
Bond Reversal
Probabilities of higher bond prices appear to be low at this juncture.
An historic market crash, then 0%, interest rates, a pandemic 'scare' along with massive volume have not pushed bonds significantly higher; these are clues we may be at reversal levels.
If so, expect turbulence as TLT burns off late coming demand.
Whenever there is massive volume accompanied by a price spike, it’s typically a rotation out of strong hands to weak; the professionals leave the amateurs holding the bag.
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3/17/20
Bond Reversal
Probabilities of higher bond prices appear to be low at this juncture.
Using the fact continued swift deep market declines, announcement of 0%, interest rates have not pushed bonds significantly higher, are clues we may be at the all time top.
If so, expect turbulence at this level as TLT burns off the late coming demand.
Whenever there is massive volume accompanied by a price spike, it’s typically a rotation out of strong hands to weak; the professionals leave the amateurs holding the bag.
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3/16/20
Bond Market:
Bond & Stocks Both Down?
Recall the Dodd-Frank bill passed in 2010, had the result of removing nearly all liquidity from the bond market.
Things are fine on the way up. The way down … well, let’s see how that works out.
Inverse funds (not financial advice) for the long bond proxy TLT, are TBT (2X inverse) and TMV (3X inverse).
In the past five trading days, there have been at least three 'market halts'; Can't get in or out.
This is most likely the new norm on go-forward basis.
9/15/19
Bond Reversal: Interest rates higher
Extended market with rates moving up … not good.
The chart of the bond proxy TLT, shows the familiar pattern: Spring-to-Up thrust. It also shows where the ‘commercials’, the professionals entered a record long (futures) position.
The spring to up-thrust set-up was prevalent in Wyckoff’s day and so may be over a century old; Possibly as old as the market itself.
Get in and get out quickly. The way of the professional: It’s the exact opposite of the ‘management’ industry's maxim of buy-and-hold.
If you are reading this and still using a certified manager (or are one yourself), maybe it’s time to start asking some hard questions. Even show him (or her) this site and observe their response. That in itself, may be telling.
Back in the day, my sister worked at Compaq computer. Dell computer had been in business a few years with sales around $220-million (it’s now $78.7-Billion).
I asked her what she thought. Her response was typical “establishment”. She derided Dell as a start up that had no business in same arena as-all-so sophisticated and elite Compaq. Such was Compaq’s arrogance and established (so they thought) market.
That was then and this is now. Compaq for the most part, is long gone. Soon that may be the same story for the 'certified’ establishment. When the market takes a major hit whether it be stocks, bonds (or likely both), the lawsuits will start. How many lawsuits will it take before the entire wealth management system shuts down (or is confiscated) except for the wealthy elite?
It’s best to get out in front of such tectonic changes before the stampede.
9/9/19
Bond Market Hovers at Support
One way for bonds to make a new high is to get itself into spring position. TLT, is hovering just at support (mid-session). Penetration into the area shown would be the set-up.
If that happens and bonds move to new highs, it may post a dangerous bearish divergence.
Recall, as a result of the Dodd-Frank bill, liquidity has been removed from the bond market. Everything’s fine until there’s a significant downside reversal.
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7/23/19: Reading the Tape: Is it worth it?
In Wyckoff’s writings, he comes to the conclusion, that ability to read the tape is the most important factor to acquire market profits. In his words:
“Success in this field usually results in years of painstaking effort and absolute concentration on the subject. It requires the
devotion of one’s whole time and attention to the tape”.
Wyckoff, Studies in Tape Reading, Published in 1910
So, is it worth it? Let’s take a look at a most recent example.
Yesterday, at approximately 12:15 p.m. EST, an update on bonds (TLT) was posted. That post indicated, at this juncture in time and market position, the “risk is least”.
That meant taking a position on the short side (via inverse fund TBT or TMV) was at its lowest risk of loss.
Going short had already been discussed at length with charts identifying the wide high volume area of TLT.
The ‘risk is least’ is identified on the chart of TBT (2X inverse TLT) as 29.10. A low risk stop would be 29.05. So, if an entry was made, we're risking 0.05 points per share.
A risk of $500 let’s say, would mean a TBT position of 10,000 shares or about $291,000 in capital.
Think that’s a bit much? Well, it just so happens, during today’s pre-market session there was a block trade of 24,000 shares of TBT that had been split up into separate transactions (sixteen total) of 1,500 shares each.
The average price for that TBT entry was around 29.27. Total capital allocated in the block was $703,000 … approximately one and a half times our hypothetical $291K.
Watching that block go by on the tape, gave some added confirmation an entry at 29.10 the day prior, was a good move.
At the open today, it was a wild affair for bonds TLT, and TBT. Bonds had a gap-lower open and thus TBT was a gap-higher.
Currently, TBT is at 29.54 and doing some quick math on our 10,000 shares, we’re up $4,400 in a matter of hours.
What may be more important is TBT never looked back. All of this morning’s gyrations are taking place at a higher level. We can let our hypothetical position sit and gather profit … all the while, the battle rages higher.
So, you have to ask yourself, is a gain that’s equivalent to a full two weeks engineering pay (including all the unpaid overtime … you guys know what I’m talking about) in a few hours at your own private office desk worth the effort?
Incredibly, most of my colleges and acquaintances say no. “It’s too abstract”. “We have our own [money] advisers, so it’s best you search for a different crowd”.
Wow. Well, for starters I’m not looking to advise anyone. This site is for me and my firm. As stated in the ‘About’ section, I'm looking for the big move. Keeping track of the data and ideas has become so unwieldy and hard to access quickly, an electronic platform (this one) has been created.
Secondly, with all the obfuscation in the press concerning nearly every important topic, one has to be able to think abstractly to discern reality and then act accordingly.
A final thought is this link. Take a look at the complete garbage that is ‘climate change’. There’s no telling how long this link will be active but it’s a good example that nearly everything pushed out by the media is a lie.
To think past a lie or a series of lies … never ending, requires some form of abstract thought, does it not?
Wyckoff quote used with permission
7/22/19: Long Bond Reversal Test
At this juncture, the risk is least.
12:15p.m. EST
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7/16/19: Long Bond (TLT) Set To Open Lower
Pre-market activity in bonds (TLT) forecasts a lower open that is below the previous session low.
If the prior session low is penetrated and action continues lower, TLT remains on track to test the area of wide, high-volume price action. Rates will rise correspondingly.
Why the market behaves is this way (as far as I know), is never fully explained either in Wyckoff’s writings or the David Weis video. Both masters just accepted the fact of price action.
The potential for retracement to the wide area shown, has been identified no matter the news.
It’s based strictly on prior market behavior that’s been documented in various forms since the early 1900's; both in Wyckoff's and Livermore's writings.
Financial news is much like the Gladiator games of Rome; it’s there to distract the masses while the treasury is being looted.
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Long Bond (TLT)
7/6/19
Over the past month, the long bond (TLT) posted a terminating wedge and then, reversal.
It’s typical market behavior to test areas of wide price action and heavy volume. One such area is shown on the chart.
What’s going to happen to real estate (IYR) if bonds retreat and interest rates rise?
Looking at the latest IYR chart (6/30/19, update), typical behavior is a 10-point retrace.
Note: Prior moves lower of 10-points took IYR back to support areas before resuming the up-trend.
Not so now: Such a move would take IYR below one, and possibly two established support levels (~80 and ~77) which would then become resistance.
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Long Bond (TLT)
7/5/19 (before the open)
Chart of TLT shows bonds going straight up ...
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4/3/19
So now, the bond inversion has inverted
From our end, the reversal (potential) in bonds was identified two weeks ago as TLT broke through established resistance.
Now, TLT is threatening to push back below support and confirm an up-thrust. With such a violent move higher in the past two weeks, one can expect some testing action at these levels.
We may confirm an up-thrust (with a test and move lower) or may not. TLT could drift back into apparent chaos and prepare for another opportunity. This is the way of the markets.
If bonds do move lower and continue lower, the set-up would become similar to the late summer of 1987. Stocks extended and interest rates moving up.
Important note: The S&P remains on track to hit 3,300 somewhere between mid June and mid July this year.
Other news: Foot Locker (FL) blasted though the stop level in what may be either a sustained move to new highs, or (more likely) short covering to take out the stops from yesterday’s action … including ours.
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3/26/19
Swing Trade in Bonds?
Bonds are on track for a reversal to test the wide bars as shown.
Doing so, would carry the inverse bond fund, TBT from current levels around 33.00 to possibly 38.00-ish or higher, depending on how much churn was present in the move.
That move, 33.00 to 38.00 has potential for a modest 15% gain with low risk.
A sharp move breakout in TLT has already occurred. Such moves help to reduce the risk of an opposing position.
We’ll need to get a new daily low in TLT, below 124.51, as a sell (sell short) confirmation.
Anything past yesterday’s high of 125.94, would probably negate the entire TLT reversal set-up.
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3/24/19
Bonds Extended?
The long bond (TLT proxy) has gone from spring to up-thrust in less than five months (click here). There was a secondary spring set-up (in the March 3rd, update) that aided the launch into what is now the current up‑thrust condition.
Note: The 3/3/19 update was correct and incorrect at the same time. The initial spring is identified correctly off the 11/2/18, lows but the up-thrust at 1/3/19, proved to be short-lived. However, the anecdote about the consumer being tapped out has not changed. J
In the case of bonds, the chart insert shows the up-thrust condition along with diminished force (or trader commitment) to get to that level.
As a corollary, the S&P moved down swiftly on Friday and that may have added some extra boost of panic buying into the ‘safe-haven’.
At this point in time (post 2009 lows), there are no safe havens; at least not in the markets.
If TLT reverses on Monday or sometime soon after, below the 123-124 area, we have confirmation of an up‑thrust and potential for a quick move to lower prices with rates up.
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3/24/19
The question is, will the high levels of TLT hold? Have the professionals cashed out after positioning long at the November '18, lows?
3/3/19: Bonds Break Lower
The bond market continued sharply lower during last Friday’s session and closed near the low … with rates moving up.
We have zoomed in on the weekly chart (StockCharts) of the bond proxy, TLT to show the action of the past two years; more specifically, the spring to up‑thrust set‑up.
It’s unknown how long this specific pattern has been repeating in the markets. It may indeed go all the way back to 1910 and earlier, when Wyckoff made note of the two phenomena.
Any set‑up can be negated of course. Anything can happen.
However, with over two months of TLT price action struggling to get above the 121 resistance area only to break (at this point) decisively lower, points us to a potential significant reversal.
As sated in the prior update. Interest rates moving higher will put the brakes on debt-based economic activity.
As a self-experiment, just take a trip to three or four major retail stores in your area and see if you’re not accosted at every single one to either ‘put it on your credit card’, or even better, ‘open a new credit account’.
I recently witnessed such an event at a building retailer. Imagine the scene. It’s early morning in winter and there won’t be any sunlight for at least another hour.
A ‘good-ol-boy’ type with flannel, overalls and a feed store cap stumbles bleary-eyed into the store. He begins to make his way to the lumber department when out of no-where comes a middle aged, portly employee with faux joviality.
He promptly encroaches into the customer’s personal space, practically touching him with his prodigious belly and announces, “Can I interest you in a credit account with us?”
Our bubba is so stunned that he mumbles something unintelligible but blindly follows the retail assailant. He disappears down the isle not to be seen again.
Retailers are absolutely desperate. They continue to hire low-wage minions in the attempt to keep payroll costs minimal while they extract every last drop of purchasing power from the soon-to-not-be middle class.
If our bubba was middle class, he probably won’t be much longer after being bludgeoned by his new high interest rate credit account.
My firm has no positions in bonds and so we’re able to discuss the technical aspects in this open forum.
We‘re not short in bonds but we are active in the market(s). When those positions are closed out, they may be of significance and will be discussed at that time.
2/28/19: Stockman's Back
David Stockman is back touting the end is nigh as he’s been doing for years. The interviewer, Cavuto notes this at time stamp: 5:30
Fundamentalists are good at giving an overall perspective of market conditions. However, what they’re not good at, and what’s the most important part, is saying “when”. When is the market going to turn? When is the time to either get in or get out?
They simply can’t (or won’t) as it requires focus on price action coupled with decades of resulting experience.
This time around, Stockman may have something. In the Cavuto interview, he mentions bonds. So, let’s take a look.
We’re using TLT as the proxy for the long bond and StockCharts for the analysis.
The “Spring to Up-thrust” in TLT is clear. Recall that up‑thrust is a reversal pattern. So, at this juncture, bonds are poised to reverse and head lower with yields moving higher.
We already have consumer real estate in a slowdown. Commercial real estate is in a precarious position with huge numbers of store closings.
These inflection points in the markets and bonds appear to be occurring simultaneously.
Rising interest rates (even just a bit) may put in the final kibosh.