US 10-Year Yield, Target Below 1.53% Remains
David Solin | Mar 31, 2016 02:57AM ET
Near Term US 10-Year Note Yield Outlook
The Mar. 23 email, again affirmed the view of a top at the Mar. 16 high at 2.00%, and with declines back to the Feb. 11 low at 1.53% (and even below, though further downside may be limited, see longer term below) ahead. The market has indeed declined since, with those new lows still favored ahead. Note that technicals are bearish (see sell mode on the daily macd) and the market is seen completing the 3-wave upside correction (a-b-c) from that Feb. low. Additionally, oil is seen having topped while the S&P 500 has finally reached that long discussed "ideal" area to form a more major top in the 2065/75 area (correlated markets). Nearby support in the US 10-yr. yield is seen at 1.76/80% (50% retracement and base of bullish channel from the Feb low) and 1.63/65% (low from Jan. 2015). Nearby resistance is seen at the bearish trendline from Dec. 30 (currently at 1.94/96%) and that 2.00/02% high.
- Bottom line: top still seen at the Mar. 16 high at 2.00%, with declines below that Feb. low at 1.53% favored ahead.
Strategy/position:
Still short from the Mar. 3 resell at 1.83%, and for now would continue to stop on a close .02 above that bearish trendline from Dec. 30.
Long-Term Outlook
Long held view (years) of an extended period of wide, ranging lower as the market forms a huge falling wedge from 2003 and with eventual declines below that June 2012 low at 1.38% remains in place. Wedge patterns break down into 5 legs, targeting those new lows within that final leg. Though this also fits the nearer term view of declines below that Feb low at 1.53%, there is some risk for a limited break of 1.53% and more extended period of wide ranging (months), before finally breaking below that 1.38% low (see in red on weekly chart/2nd chart below). At this point, that remains a "risk" to be aware of and will be looking for further signs of that risk on a break below that 1.53% low. Key resistance remains at the ceiling of the huge wedge (currently just above that June 2015 high at 2.50%) as a break/close clearly above would argue that a more major bottom (years) is finally in place.
- Bottom line: still in large falling wedge since 2003 with long held view of declines below that June 2012 low at 1.38% still favored (some risk for a more extended period of ranging first).
Strategy/Position
Switched the longer-term bias to the bearish side way back on Dec. 17 at 2.09% for eventual declines below that June 2012 low at 1.38%. But with some risk for a more extended period of ranging first, will be quick to reassess on declines below that Feb low at 1.53%.
Current
Nearer term: short March 3rd at 1.83% for at least temp lows below that Feb bottom at 1.53%.
Get The News You Want
Last : short Nov 12 at 2.31%, took profit Mar 1 above t-line from Dec (then 1.75%, closed 1.83%).
Longer term: bear bias Dec 17th at 2.09% for eventual new lows below 1.38%.
Last : bullish bias Dec 5th at 2.30%, neutral Dec 16th at 2.09%.
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