The swing chart of the 30 year T-Bond has turned down recently. After a possible basing activity, price broke below the second swing low yesterday. The third swing low is around 4.05% yield. A break of this swing would confirm the short term has turned from up to down.
The 50/50 point of the 2007-2008 drop is close below and should provide support to yield. A break below the 1×1 angle would signal that the bull market in bond prices has resumed. Note that the bounce off the 2008 yield low lasted 174 days which is very near 180 days. It is possible that move was the complete correction to the bull market that was needed for at least a test for the 2008 yield low.
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Tags: Bonds5 Comments
I was listening to an interview with Louise Yamada and she offered up the following thoughts regarding bonds:
Interest rate cycles tend to last for a long time. I think she said 27 to 33 years. She said the transition from rising to falling rates tends to be inverted Vs like the early 80s while the transition from falling to rising tends to be an extended sideways trading range first. I think she anticipated a range between 3.5 to 5.5% with 5.5% being her line in the sand that the trend had reversed. Off the top of my head, she pointed out the bear market bottomed in 1932 but the “pivot low” in interest rates wasn’t until 14 years later in 1946. She suggested the possibility that the Dec 2008 2.0% yield could be the pivot low of this cycle but she wasn’t emphatic about it.
Andy,
Quick question, and I’m probably being an idiot here, but I have a stockcharts subscription and I can’t figure out how to plot 2 securities on the same chart, and I see people do this all the time, and I think I’ve seen charts you’ve made with more then 1 on the same chart.
Mike – I agree the 2008 low was “probably” close to the low. Sure yield may go a little lower but the percent moves increase dramatically as price moves below two. My guess is between 2-5.5 but if yield spikes to 1.5 or 6 for a short time then I would not be surprised.
Mike – Use the “Indicators” drop down to pick “Price”. Then put in the second ticker. You can choose above, below, or behind for the second price. If you want a ratio, then separate the tickers with a colon “:” .
Thanks Andy! Much appreciated.
I just plotted a monthly chart of Natgas along with CHK going back to 2000-2001. As one would expect, there is a tight fit between the stock price and the commodity price EXCEPT since the beginning of this year where they have diverged massively with Natgas continuing to make new lows and CHK up on the year. I would expect that divergence is not sustainable.
If you have time, can you run your analysis on CHK? I specifically recall you nailed the top pretty good in the late 60s/early 70s. From my perspective, the old support was 26-27, and it seems to have persistently failed multiple times at the 24-26 level since the Oct 08 collapse. It appears to have shown relative weakness the last few months as the market hits new highs but the stock does not. I’m considering dumping it here at 22.