The Level 2 (Intermediate Term) View on Ten Year Bond Yields

Today continues the series of posts on the ten year bond yield. The first three charts in the series were the FoxPulse5, FoxPulse4 and FoxPulse3. The first two 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) turned bearish on September 16th.

The FoxPulse2 (Intermediate term view) chart is shown today with the analysis beginning on July 3rd. It shows a complete trending series of pulses (Alpha – Beta –Delta – X – Y  -Z) that ended on August 27th and brought higher yields. A new series then started on that date. After the FoxPulse3 turned bearish on September 16th, it was a bearish signal on the FoxPulse2 when the Alpha Pulse base (August 27th low at 27.07) was broken. This occurred on September 18th.

Confirmation that we are now in a bear market at this level (FoxPulse2; Intermediate view) is shown by the RSI. It has now broken below the support zone reserved for bull markets.

The price pulse model says that this chart will remain bearish unless the next upward pulse (Delta) breaks the current Alpha peak (29.84).

I will look at the FoxPulse1 chart next. To recap, Levels 5 and 4 are bullish while levels 3 and 2 are bearish on the ten year yield.

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.

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.

Daily RSI Signals Bear Mode

Not much has changed over the past couple of days. I have added the TD Trend Factor target (purple line at 1614.62). Note it is in the SLOT (the 50-78.6% retracement area which I have drawn as a box on today’s chart) with the next larger Beta-X trendline (in orange). A close beneath this line will raise the chances significantly that the trending impulse pattern from last November is complete.

I am also watching for a possible bullish divergence between price and the RSI here. Any such development would mark the end of wave 3 or C from the August 2 high.

Another item of interest from the daily chart:

1) RSI (top pane). We have now had two readings below 38. This lends credence to the view that the August high completed a trending impulse pattern from November 2012 AND that the daily chart is in bear mode.

Bottom Line: The chart is bearish. Let’s see how it develops over the coming days.

Trend Change Averted .... For Now

We had an upside opening gap that was not filled during the trading session Tuesday. As explained yesterday, this means that the dip below TDST support was invalidated … the cash SP500 bulls continue to cling on! There were also a couple of other developments that lend support to the bullish case over the short term:

RSI Range. Although an oscillator, the RSI (top panel) can be used as a trend indicator as shown by authors such as Constance Brown. The decline from the May high is still holding the area reserved for bull markets (above the 38 level). Like with TDST support, Monday’s price action threatened to, but could not push this indicator into a bearish trend status.

Composite Index. This indicator (middle panel; invented by Connie Brown) has just made a bullish divergence with the RSI.

Right now the best I can see for the bulls is a rally that peters out by July 8. I can even see the June 18th high of 1654.19 being broken – but not the May high. This is not a prediction or what I expect but the best case bull scenario I can envision. Let’s see what the bulls have.