Volatility Reports Bonds 6/15/2021
June 15, 2021
June 15, 2021
“I used to think that if there was reincarnation, I wanted to come back as the President or the Pope, or as a . 400 baseball hitter. But now I would like to come back as the bond market” James Carville
In the previous group post and blog post, I pointed out how interest rate cycles are regular and reliable. I pointed out as well that the fear that rates are moving higher had not abated since the initial run higher and that implied fear data reveals a coiling up of the data denoting frustration and confusion by the market regarding the viability of inflation.
Our model suggested a rapid and sudden movement in this data, and while I pointed out that “Volatility modeling is direction neutral, it tells the investor/trader, in this case, to trade the break, to trade the trend following signals. As noted above, TY rates have given a bullish signal on the rates.”
In our LinkedIn Group, I said ” TY is in a cluster of resistance as mentioned previously in this space. The 132.68 price if broken is a reversal trigger until the last Friday of June. Contrary Thinker’s bias is bearish for reasons outlined before and suggests TYO or shorting the nearby futures.
The market after implied volatility spiked lower ending its counter-trend of complacency, the government bonds sold off and the ten-year notes broke below 132.20, the low side of I-T (monthly) resistance, a failure sell signal.
In the Chart Gallery below the first chart shows clearly the drain of liquidity according to the Fed, and that drain is from the reopening of the REAL economy, inflation caused by none monetary reasons, like supply chain problems and drought.
The next three charts in the Gallery are about commodity-based inflation, which the majority believe what the Fed has said is “temporary.” Contrary Thinker is bullish on commodities from the March 2020 low.
CT’s chart of the 30-year T-bonds shows a massive failure. The 4 1/2 year cycle that has been posting up timely cycle lows has failed to do so with the last sequence of bottoms expected in early 2020 that produced a one-week wonder followed by a bear market. This left-hand translated cycle points to the next low series of S-T lows at the end of July, mid-October, and early December of this year.
The market has moved below its long-term moving averages and the pair of MAs have made a death cross, calling for more downtrend. Long Term support sones in from 134 to 147^19.
Suggested trade TMVDirexion Daily 20+ Year Treasury Bear 3x Shares. Buy TMV at 71 ob, stop 66 with a profit target of 120, the low side of L-T resistance. I-T Volatility model is a fresh TE#2 supporting a forceful trend.
Stop, listen and learn. Don’t let time get by you.
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Chart Gallery Reflecting Pressure for Higher interest Rates. Bond Buyers will Demand it.
Great and Many Thanks,
Jack F. Cahn, CMT
Contrary Thinker since 1989,
Contrary Thinker 1775 E Palm Canyon Drive, Suite 110- box 176 Palm Springs, CA
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