Saturday, July 21, 2007

What's Next For The Bond Market



Back on June 14th, I posted the above chart and said that the bonds should put in a bottom based on the relationship between the dollar and interest rates. As you can see in the chart above, June 14th was the bottom in the bond market and we have been moving higher since then.

If we take a look at the chart now, Bonds should continue to rally going into early August where they are expected to put in a high and then sell off. On a seasonal basis bonds due tend to rally after July going into late fall, but I'm going to put more weight on what the above chart is telling me and I will look for the bond market to trend lower after early August.

Keep in mind these intermarket relationships can and do fall apart that is why it is important to use other technical tools to confirm what the above chart is forecasting. For example when early August comes, if the bond market triggers a bearish moving average crossover signal to short, I would take that signal because it coincides with what the above intermarket relationship is forecasting...As always, we'll see what happens.

5 comments:

JBetz said...

Kevin

Very interesting chart. I'm curious how one offsets price using stockcharts.com as you did with the dollar?

thanks
JB

Kevin said...

It's hard to explain because it's not a feature of stockcharts.com...I actually manipulated the studies in such a way that I was able to offset the chart...You have to basically turn the barchart into a moving average and then offset it.

Eeeesh said...

Kevin

Thanks for the update. With what you have found I am guessing that maybe the dollar is getting so low that that the world is seeing the US as a bad credit and will want a better yield for their risk.

Thanks

JBetz said...

Kevin

I wish I was as astute with computers as you.

As a college undergrad with a strong interst in TA, I recently fired up my own technical blog to "put my thoughts on paper". Since I regard your two blogs and obsevations as the most useful/insightful out there, I'd appreciate if you would mind taking a look and offering any comments/suggestions.

http://dormroomtechnicals.blogspot.com/

thanks
JB

Kevin said...

Hi Jbetz,

Your site looks good...your charts are very interesting. Good luck with it..

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