Wednesday, February 15, 2017

Bonds Update

The Dec 12 post Bond Plunge Done was spot on and we have the medium term correction looked for.

6 mo.chart

click to enlarge
After what appears to be a rather modest retrace of the plunge down, upside momentum has run into trouble at the previous highs, and the 4th wave of lesser degree. 

Best case it now explores the bottom of the more recent range and extends the consolidation another month or two.

From an Elliott wave perspective this sideways structure is exactly what you would expect after a large trending move with many participants, the point of recognition associated with wave 3.
The completion of that primary impulse wave down, the break to new lows, will be wave 5.

 25 yr chart
 click to enlarge

The Fibonacci retrace points in the above chart roughly coincide with 5th wave measuring rules.
I am biased toward the 50% point as the lower number to complete a 1 of greater degree 3rd wave down.
The risk of a very long term change in trend for fixed income is extremely high after 35 years.

Pls do your own research and
This is not a trade recommendation merely Elliott Wave thoughts.

No comments:

Post a Comment