Tuesday, May 6, 2014

Interest Rates Keep Fallling

The Fed continues to "taper" and yet interest rates keep falling. Maybe there's something wrong with everyone's theories about quantitative easing?

The 10 year bond interest rate, the 30 year bond interest rate, and the zero coupon treasury ETF (the bonds, not the rate).

A correspondent writes in,

10-Year: Bearish chart, with one quick chance at S at 25 area (prior lows for Horizontal Support), 24 for the width of the just completed flat flag and the measured move of the length of the leg before that flag subtracted from the top of that flag, 20 on the double-top measurement if it gets to 24, then 17 for the crook of the prior low, prior low at 16, and the test of bottom at 14 – 15.

30-Year: Same formation as the 10, but it’s farther along already so, assuming it doesn’t turn north here at UTS, then its 31- 32 on the double-top measurement, then 28-29 on the prior low, and 25-27 on the test of the bottom.

ZROZ – here (2B target); 102-103, 107-110, 112, 115, all HR.
It goes to show how few people pay attention to technicals. People are massively short all three of those interest rate durations. Don't they like momentum?


theyenguy said...

On Monday, May 5, 2014, the chart of the 10 Year US Government Note, TLT, manifested a dark cloud covering candlestick, and traded lower, after having risen parabolically higher. suggesting a reversal lower from its rally high is imminent.

Trust in the US Fed’s purchases of 30 Year US Government Bonds, EDV, Ten Year Notes, TLT, and Mortgage Backed Bonds, MBB, has increased the supply of money needed to provide investment liquidity, and to produce economic growth. Peak Wealth has been achieved; it came via an awesome moral hazard based prosperity. Now, the investor’s risk appetite has turned to risk aversion, as investors fear that the Fed’s monetary policies have crossed the rubicon on sound monetary policy, and have made money good investments bad.

It’s Global ZIRP no more. The bond vigilantes are in control of interest rates globally, and will be calling the Interest Rate on the US Ten Year Note, $TNX, higher from 2.6%, as well as steepening the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening.

The world has attained peak wealth. Successful investing in the Pursuit of Yield Investments, such as PHO, GRID, PSP, IST, DBU, DRW, PGF, PUI, and the High Yielding Debt Investments, such as JNK, is history. The greatest investment gains came from those invested in Proshares 200% ETFs, and Direxions 300% ETFs.

The age of buy and hold investing is over, through finished and done. Profitable investing in Consumer Services, IYC, such as NFLX, TWC, CRWN, LBTYA, DTV, DISH, CMCSA, CHTR, and SATS, is history. One could begin a short selling strategy and use these Inverse Market ETFs as collateral in a brokerage account: STPP, XVZ, GLD, EUO, YCS, CMD, DNO, MLPS, OFF, SBB, SBM, EFZ, YXI, SZK, SDP, KRS, REK, DDG, MYY, EUM, HDGE, SAGG, DTYS, JGBS

Not only will the High Yield Debt Instruments, such as Junk Bonds, JNK, be trading lower, but the Zeroes, ZROS, the 30 Year US Government Bonds, EDV, and the 10 Year US Government Notes, TLT, as well. Yes all Credit Investments will be trading lower in a see saw destruction of fiat wealth.

With the failure of credit, seen in China, YAO, ECNS, Russia, RSX, ERUS, and the US Small Caps, IWM, IWC, and Commodities, DBC, trading lower, and these being going through the tipping point, authoritarianism is the new normal, and features the sovereignty of the Beast Regime of regional governance seen in Revelation 13:1-4, which provides policies of diktat and schemes of debt servitude in diktat money, where the debt serf is the centerpiece of economic activity.

whydibuy said...

One of the fastest ways to go broke is following "technical" ( sounds scientific, doesn't it? ) charts.
How many times have I heard the " hindenburg omen" technical setup occur without the big crash its supposed to precede? I would guess dozens of times.
Yeah, charts are great indicators of what HAS happened, not what will.
But, in honor of your gloominess, lets sound the alarm with a EVERYONE IN THE ECONOMIC BOMB BUNKER call,lol.

eah said...

Maybe there's something wrong with everyone's theories about quantitative easing?

Or people see something wrong with the "recovery", and do not expect big improvements in the near future. So they still prefer to own treasuries.

James said...

One of the fastest ways to go broke is following "technical" ( sounds scientific, doesn't it? ) charts.

I don't use technical analysis either, but I took the post to be less about TA than about double standards.

Normally when a security has strong momentum, people find (invent?) technical reasons to buy it. Treasurys have lots of momentum but sentiment is still negative and most people don't care about the strong technicals. Whether or not TA works, the disconnect is telling.

Opium War said...

The James interpretation certainly looks right for anyone who isn't being deliberately obtuse.

Anonymous said...

Normally when a security has strong momentum, people find (invent?) technical reasons to buy it.

And fundamentalists (pun intended) don't, with their forward earnings projections and slew of metrics that purportedly tell us what fair value is?

That's why TA is only "One of the fastest ways to go broke". Another is to blindly follow a fundamental approach without regard to the chart.

The first rule of TA is: the tape is always right.

And the first premise of TA is: the fundamentalist position is included in the price.

There is no disagreement between the two ways of approaching the markets.