December 10, 2022

Volatility Reports Long Term Bonds (Video)

Kiplinger’s Economic Outlooks are written by the staff of our weekly Kiplinger Letter and are unavailable elsewhere. Click here for a free issue of The Kiplinger Letter or for more information. Fed Chair Jerome Powell offered investors both good news and bad news at his press conference on Nov. 2. The Fed’s policy statement included new language that it would consider the effects on the economy of previous rate […]

 


The Long Bonds

Before you get into the video on the long-term outlook for bonds and how to use the new excel worksheet for cycles, here is a short-term update I started in the group. If you are a visitor and have signed up on the TradeExchange app, let me know.  In that regard, they are in the process of updating my UI and dashboard, make sure I know so you lock in your spot here in the group.

Unless you tell others that Contrary Thinker can make good calls, I have to continue to point them out. At the end of 2018, I warned the boys from Boston, the capital of the mutual fund factories, that the so-called “bulletproof” portfolio (60/40) would come to an end with the same kind of “hyper-correlation” seen in 2008.

Well after the first six months of 2022 all they are doing now is belly-aching about the 60/40 demise. Well, that is all well and good but in this industry, it is always about “what have you done for me lately? The updated chart featured here should help.

For equity players, it demonstrates how the bonds are leading the downturn. There are other leading markets, but this one has a broad economic impact. with that in mind, CT’s featured chart demonstrates the way the bond market speaks to you, once you understand volatility. Here I will point out how rule#3 preceded COTs by a day or two at the August high and the October. TE#3 is the definition of a low-energy trend that is due for a change. The trend lower walked the smoothed BB lower on the middle TE#3 with the help of an intervening TE#4 supporting the trend.

On Friday the decline in the 30-year futures was a failure, a reversal, and an S-T sell signal. With the TE#2 behind it, a move to 124 should unfold. That corrected the panic buying, retraces 62% of the counter-trend thus far, and moves below the smooth BB, which is an oversold signal.

Dates are highlighted in this chart that can be used if you plan to use the excel cycle worksheet.

 

 

Enjoy the 15-minute video, the other five are on the way.

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