Saturday, March 19, 2011

Be Afraid

No not of the Colonel (knew that was what you were thinking), but of something that does have the power to end life as we know it in the West....rising interest rates.
30 Yr Daily
click to enlarge
OK, 5 down followed by a weak zig zag retrace with near equal legs. Call it "b" or 2 of greater degree (of course it could turn out to be a double zig-zag). What else ya got?
Taking a step back;

30 Yr Weekly
click to enlarge
One of the first things of note is the support trend line going back to June 2007 (I'm coming back to that).
This counts rather easily as abc's, so for now lets use that. Note the similarity of the "b" waves ( circled ).
This count implies another "c" wave down will begin shortly to complete the C of larger degree. Various Fibonacci extensions are depicted above. Needless to say they all take out that trend line.
And yes, it is the neckline of a MASSIVE Head and Shoulders pattern on an upwardly sloping diagonal.
 Monthly
 click to enlarge
Reminded me of another diagonal Head and Shoulders pattern....this one was a reverse Head and Shoulders;

 click to enlarge
 Reverse Head and Shoulders formed by the '80 , '81, and '84 lows on the 30 yr. marking the beginning of an historic move up. It's almost a mirror image of the current set up, even taking roughly the same length of time, 4 years, to develop. Be Afraid.
The measuring rule for neckline breaks targets a catastrophic 85.














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