The Level 3 (Medium Term) View on the Ten Year Bond Yield

Today continues the series of posts on the ten year bond yield. The first two charts in the series were the FoxPulse5 and FoxPulse4. Those views (long and medium-long) were both bullish but each showed that a downward moving (in terms of yields) pulse was underway.

The FoxPulse3 (Medium term view) chart is shown today with the analysis beginning where the FoxPulse4 Y pulse began on May 1, 2013. The pulse structure shows a trending Alpha – Beta –Delta – X – Y formation that just ended at the beginning of this month. Note that going into mid-May the RSI (top pane) broke above the resistance zone reserved for bear markets. Then, after hitting the resistance zone reserved for bull markets in late June, a long series of lower RSI readings ensued while 10 year yields continued to move higher. This long period of bearish divergence was culminated when the currently unfolding Z pulse broke the Beta – X trendline a week ago today.

About to confirm this bearish development is the RSI, which is about to break definitively below the support zone reserved for bull markets.

The price pulse model says that this chart will remain bearish unless the Y pulse peak (29.84) is broken.

I will look at the FoxPulse2 chart next. To recap, Levels 5 and 4 are bullish and level 3 bearish.

The Level 4 (Medium-Long) View on the 10 Year Yield

Today continues the series of posts on the ten year bond yield. The first chart in the series was the FoxPulse5. That long term view was bullish but showed that a downward moving (in terms of yields) Beta pulse was underway.

The FoxPulse4 chart is shown today with the analysis beginning where the FoxPulse Alpha pulse began in July 2012. The pulse structure shows a trending Alpha – Beta –Delta – X – Y formation that just ended at the beginning of this month. Note that going into July 2012 the RSI (top pane) was reading less than 38 and thus indicating a bear market. Then, as shown in the last post, the RSI bounced and was able to hold the bull market support zone (see arrow in late August 2012). It then exceeded the zone that would typically contain continuing bear markets in June 2013 (arrow on chart). Now, as our Y pulse has topped, the RSI is showing bearish divergence with the price action.

The RSI action confirms that a downward Z pulse is underway on this medium-long view (level 4). However; the price pulse model says that this is only a correction within a larger bull market unless the Beta – X trendline is broken (shown in orange). But that trendline is well below the market. How deep of a correction is at hand? Should a bull ride it out? Perhaps the lower level FoxPulses will help answer those questions.

I will look at the FoxPulse3 chart next.

A Small Crack Appears In the Cash SP500

Since our last update on the cash S&P500 the Alpha pulse high has been confirmed complete as of the September 19th high. The FoxPulse1 chart has been updated (above) to reflect this.

Although this chart shows only the lowest level price pulses, there are times when signals will cascade upward across time frames. Although each upward pulse (Alpha, Delta, Y) in the series (Alpha-Beta-Delta-X-Y-Z) is making higher highs while the downward pulses (Beta, X, Z) are making higher lows, the “early warning” trendline (in orange) has been broken.

Adding to the concern is the fact that the recent high was accompanied by a technical signal. While the RSI (top pane) made a new high the Composite Index (middle pane) did not. This is bearish divergence. Those with a very low risk tolerance may want to get less bullish here. The line in the sand at both this and the FoxPulse2 level would be a break of the horizontal trend line (in cyan) at 1681.96.

The Level 5 (Long Term) View On The 10 Year Yield

Today I will start a series of posts on the ten year bond yield. The first chart will be the long term view provided by the FoxPulse5.

The chart shows the downtrend in yield that has been unfolding over the past number of years – some would say since 1981 actually. This posting is not to argue that that downtrend is over, but to point out that the FoxPulse did turn bullish on its long term basis (level 5) a year ago (green arrow). This signal occurred when the Delta – Y trendline was broken and remains in effect today.

Note the RSI (top pane) at the most recent Z pulse bottom. There was a large bullish divergence between this indicator and price. After the first bounce from that low the RSI moved to a value of 51. It then declined to 42 (black arrow); holding the support zone found in bull markets. We then had the bullish break of the Delta – Y trendline.

Today the Alpha pulse up from that low is over and so we are in a downward Beta pulse. I will look at the FoxPulse 4 chart next.